Elias P

Imagine telling someone 5 years ago they’d see an almost 80% drawdown in $NKE over the following 5 years.

Peter Lynch had 300% turnover per year in the early years of the Magellan Fund. Joel Greenblatt had similar turnover at Gotham Capital. Even Warren Buffett’s public company portfolio ranged between 50-100% turnover per year during his first three decades. In fact, contrary to what most believe, many of the greatest long-only investors had their best performance when they had higher rates of turnover in their portfolios. And these were investors that invested in larger, more established businesses where low turnover is much more achievable. We invest in small emerging companies. Microcap companies evolve in different ways. Not all of them are good ways. We can’t say at the beginning, “I’m going to hold this stock for 1-5-10-40 years”. No, we are going to hold it as long as management executes and constantly compare them against other opportunities. We might hold them 3 months, or it could be 10 years. If I’m being honest, most companies only deserve to be rented. Ownership is earned. The quickest way to go broke in microcap is buy and forget. Buy and hold forever only works if management executes forever.

I got to do my first stock pitch yesterday. It was for the MS Microcaps Summer Virtual Conference. If you want to check it out you can click on the link. I chose to do it on one of the companies I’ve held onto the longest, $BUKS. Here’s the presentation slides that I used and the full video of my pitch along with the Q&A should be up on MS Microcap’s Substack. There’s a lot of other cool companies that presented over there too and would encourage my readers to check it out. Today is the last day to tune in Live.

Michael Mauboussin's book recommendations

The advantage of doing nothing

Pabrai being in on $KSPI is interesting. Especially since it probably first came across his desk via Turkey. I've not looked at the business since it traded in London and even then I didn't look very hard.

Not advocating to pay up here. But hear me out. In Oct 2018, Walmart traded for 50 times earnings. The stock was 33$ per share. Say you bought it. And forgot to sell it. Between then and now, a lot happened. Pandemic, unseen inflation, tariff wars etc. You would be sitting at 236% total return. 16.8% cagr, outpacing S&P. This is after overpaying for a high quality business. Obviously I m cherry picking it but my point is investment is not easy. But sometimes we don’t have to try and be too intelligent.

IMO investors who say speaking with management isn't useful usually: a) have never bothered speaking with many management teams (they need more reps) b) don't do enough diligence before the call, so it's easy for management to steer them in the direction they want (the type of investors who spend the first half of the call having management walk them through the deck) c) don't speak with the same management team often enough, or don't spend enough time with them if it's a one-off call (1x30min won't cut it) That said, observing from the sidelines can work wonders too, especially if the company also holds earnings calls.

Berkshire shares compounded at 56% annually from 1975-1985. Buffett made hay in the 70's. WaPo was selling for ~3x EBIT. Ad agencies were sub 2x EBIT. GEICO, See's etc. Portfolio snapshot in 1985:

SpaceX was valued at ~$3 trillion a month ago. Say you want a 10% ROI. A $3T investment must pay you $300B in perpetuity. If the biz makes $0 for next 5 years, it must pay you $483B in year 6 and every year after. SPCX did $19B of revenue in 2025. The stock is down 45%.