By Hardcore Value
This Tiger Cub Giant Is Betting On Banks And Tech Stocks In The Recovery
The first two months of the third quarter were the best months for D1 Capital Partners' public portfolio since inception, that's according to a copy of the firm's August update, which ValueWalk has been able to review. Q2 2020 hedge fund letters, conferences and more According to the update, D1's public portfolio returned 20.1% gross Read More
I was looking at Netflix and was reminded of an additional checklist item for new investments.
Can this business be destroyed by Amazon?
Or more generally:
Will the business attract larger competitors who are willing and able to operate with substantial long term losses?
For Netflix the threat of Amazon Prime (their video streaming service) is very serious. Amazon prime has great existing client relationships, far greater financial strength and solid contacts with media companies who are looking to expand their distribution base. Staples whose brick and mortar stores, as well as their valuable delivery franchise is at risk of being hurt by the retail monster we call Amazon. Amazon is disrupting retailing like Walmart did in the 80s and 90s, it’s a game changer for the industry.
Anyways, back to the Checklist idea. Checklists are a wonderful tool for investors because we are human and our brain makes short cuts. I’ve been writing research reports recently and actually going through the checklists and writing the answers out is a huge advantage over other investors.
Check out this 2009 Colombia Business School gem of a presentation by Mohnish Pabrai who uses checklists extensively and is one their greatest proponents. I might add a checklist page in the future to the website too.
Note: Slides 18-20 discuss Mohnish’s change in portfolio allocation from the 10×10 portfolio allocation strategy pre 2008-2009 to, at this presentation’s time, a 20-30 company allocation strategy.
We now know Mohnish has changed back to a 10×10 portfolio allocation strategy, of course with the caveat of not wanting to be fully invested except in periods of extremely severe distress.