cover of episode TIP681: Mastermind Q4, 2024 w/ Stig Brodersen, Tobias Carlisle, and Hari Ramachandra

TIP681: Mastermind Q4, 2024 w/ Stig Brodersen, Tobias Carlisle, and Hari Ramachandra

2024/12/8
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Hari Ramachandra
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Stig Brodersen
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Tobias Carlisle
Topics
Stig Brodersen: Evolution AB: 博彩业是一个高利润率的行业,Evolution作为供应商,受益于博彩业的增长。其高利润率可能无法持续,但其在游戏开发和运营方面的专业能力以及作为供应商避免运营商面临的挑战构成了其竞争优势。尽管市场存在对来自亚洲非监管市场的担忧以及价值投资社区中对该股票看法的转变,但Stig认为,这些因素并没有从根本上改变公司的业务,并且该股票的估值被低估。 Occidental Petroleum: 对西方石油公司的投资是基于对能源行业的长期看好,以及该公司在管理和资本配置方面的优势。尽管短期内经济因素可能对能源需求产生影响,但长期来看,能源行业仍将保持增长,西方石油公司作为行业内的优秀公司,将从中受益。 Alpha Metallurgical Resources: 冶金煤是钢铁生产的重要原料,而可再生能源的发展也需要大量的钢铁,因此对冶金煤的需求将持续增长。Alpha Metallurgical Resources 作为一家管理良好的冶金煤生产商,拥有强大的现金流和健康的资产负债表,并且积极进行股票回购,这使其成为一个具有吸引力的投资标的。 总的来说,Stig 的投资策略是基于对公司基本面和长期增长的判断,并对市场情绪的波动保持谨慎态度。 Tobias Carlisle: 伯克希尔哈撒韦公司巨额现金储备:市场估值过高以及经济可能即将衰退是伯克希尔哈撒韦公司增持现金储备的可能原因。 Evolution AB: 对Evolution AB的估值分析,认为其估值合理,但其高利润率可能无法持续。 Occidental Petroleum: 看好能源行业,认为能源行业长期投资不足,供应受到限制,西方石油公司管理良好,专注于向股东返还资本。 Alpha Metallurgical Resources: 看好冶金煤行业,认为其需求将持续增长,Alpha Metallurgical Resources 作为一家管理良好的公司,拥有健康的资产负债表,并积极进行股票回购。 总的来说,Tobias 的投资策略是基于对宏观经济趋势和公司基本面的判断,并对市场波动保持谨慎态度。 Hari Ramachandra: 伯克希尔哈撒韦公司巨额现金储备:对巴菲特增持现金储备的原因进行了分析,认为这可能是战术性的而非战略性的决策,与市场估值、经济放缓以及对苹果和美国银行持仓的调整有关。 Evolution AB: 对Evolution AB的增长潜力表示认可,认为其在市场中的竞争优势以及其在亚洲市场的强劲表现值得关注。 Occidental Petroleum: 看好西方石油公司,认为其受益于美国政治环境的变化以及能源需求的增长,并认为巴菲特的投资为其提供了额外的保障。 Alpha Metallurgical Resources: 对Alpha Metallurgical Resources 的估值和增长潜力表示关注,并对钢铁行业的技术进步对其可能产生的影响进行了分析。 总的来说,Hari 的投资策略是基于对市场趋势、公司基本面以及其他投资者行为的综合判断。

Deep Dive

Key Insights

Why is Buffett holding a $300B+ cash pile in Berkshire Hathaway?

Buffett's cash pile reflects the expensive valuation of the stock market, with the Shiller PE ratio at 38, significantly above the long-term average of 17. Additionally, there are macroeconomic concerns, including potential recession risks due to an inverted yield curve and slowing private sector activity. Buffett likely sees fewer attractive investment opportunities in the current environment.

What is Stig Brodersen's bull case for Evolution AB?

Stig is bullish on Evolution AB because it is a leading supplier of live casino games and online slot machines, capturing 10-15% of player losses. The company has a 55% profit margin, strong growth potential, and operates in a fragmented market with high barriers to entry. Evolution benefits from tailwinds like increasing regulatory friendliness and demand from younger demographics.

What are the risks associated with Evolution AB?

Evolution's margins are expected to decline due to competition and expansion into lower-margin markets like the U.S., where regulatory and labor costs are higher. Additionally, 60% of its revenue comes from unregulated markets, introducing uncertainty. The stock also carries the stigma of being a 'sin stock,' which may deter some investors.

Why is Hari Ramachandra bullish on Occidental Petroleum?

Hari is bullish on Occidental Petroleum due to its strong position in the Permian Basin, favorable regulatory environment, and significant cash flows. Buffett's increasing stake in the company, now at 28.4%, provides financial backing and optionality for future acquisitions. Additionally, Occidental's focus on returning capital to shareholders and its involvement in direct air capture technology add to its long-term appeal.

What are the bearish arguments for Occidental Petroleum?

Occidental Petroleum faces macro headwinds, including potential economic slowdowns and volatile oil prices. The company also carries significant debt, which could be a concern if energy prices decline. Additionally, the success of its direct air capture technology is uncertain and may not contribute meaningfully to its valuation in the near term.

Why does Tobias Carlisle recommend Alpha Metallurgical Resources?

Tobias recommends Alpha Metallurgical Resources due to its strong cash generation, low valuation, and excellent balance sheet. The company produces metallurgical coal, essential for steel production, and benefits from long-term demand for green infrastructure. Its aggressive share buybacks and management's disciplined approach to capital allocation further enhance its appeal.

What are the risks for Alpha Metallurgical Resources?

Alpha Metallurgical Resources is exposed to volatile met coal prices, which are influenced by global steel demand. A slowdown in China, a major steel consumer, could negatively impact the company. Additionally, advancements in electric arc furnace technology, which reduces the need for met coal, pose a long-term risk to its business model.

How does Evolution AB's business model work?

Evolution AB supplies live casino games and online slot machines to gambling operators. When a player loses money on a game, a portion of the loss goes to Evolution, typically 10-15%. The company benefits from high margins, especially in Asia, where games like Baccarat are popular and can accommodate unlimited players. Evolution's capital-light model and high return on invested capital make it an attractive investment.

What is the significance of Buffett's investment in Occidental Petroleum?

Buffett's investment in Occidental Petroleum, now at 28.4% of the company, provides financial stability and optionality for future acquisitions. His initial investment in 2019 included preferred shares with an 8% dividend and warrants to buy common shares at $62.50. Buffett's backing signals confidence in Occidental's management and its long-term prospects in the energy sector.

Why is met coal essential for green infrastructure?

Met coal is crucial for steel production, which is a key component of green infrastructure like wind turbines and solar panels. For example, each megawatt of wind power requires 120-180 tons of steel, and a single wind turbine needs 225-285 tons of steel. Despite the push for renewables, met coal remains indispensable for building the infrastructure needed to support green energy initiatives.

Shownotes Transcript

In today's episode, Stig Brodersen speaks to Tobias Carlisle and Hari Ramachandra. Stig only owns five individual stocks, and in this episode, he outlines why Evolution is one of them. Hari’s pick, Occidental Petroleum, a stock Buffett has recently added to, and Tobias pitches Alpha Metallurgical Resources, a value stock that Mohnish Pabrai has loaded up on. 

IN THIS EPISODE YOU’LL LEARN:

00:00 - Intro

01:34 - What to make of Berkshire’s $300B+ cash pile

33:16 - Stig’s bull case is for Evolution (Ticker on the Swedish Stock Exchange: EVO) 

41:03 - The bear case for Evolution, including why their margins will likely decline

44:02 - Why Hari is bullish on Occidental Petroleum (Ticker on NYSE: OXY)

47:44 - The bear case of Occidental Petroleum, including macro headwinds  

56:46 - Why Toby has invested in Alpha Metallurgical Resources (Ticker on NYSE: AMR)

1:06:28 - The bear case for Alpha Metallurgical Resources, including the role of China

Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.

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