Capital Alliance Podcast

From Pro Poker to a $155M Fund: Evan Tindell's Investing Playbook

• Ken Majmudar • Season 1 • Episode 6

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Join the Capital Alliance Waiting List Here: https://linkly.link/2ebz3

In this episode of the Capital Alliance Podcast, Ken Majmudar sits down with Evan Tindell, founder of Bireme Capital, a long/short equity fund.

Evan shares how he built Bireme Capital from a $20 million seed from Ballantyne to over $155 million AUM a rare trajectory in the RIA space.

He breaks down his investment philosophy, his approach to short selling, why he believes undervalued stocks are caused by cognitive biases, and how he thinks about asymmetric opportunities on both sides of the book.

We also go deep on the current market environment -- AI-driven valuations, quantum computing stocks, and where Evan sees the most compelling short opportunities hiding in plain sight.

And at the end of the conversation, Evan shares what Capital Alliance has meant to him as a fund manager -- and why investing in the right room of people turned out to be one of his best decisions.

We cover:

- How Evan launched Barium Capital with a $20M seed and scaled to $155M+

- His framework for identifying undervalued stocks through cognitive bias theory

- Why short selling requires a particular mindset -- and who it's right for
Apple, Intel, AI washing, and where the real short opportunities are today
The difference between "idea generation" and conviction

- How macro environments and narrative cycles create mispricings
What it actually means to be part of a peer community as a fund manager

Follow Evan Tindell : https://x.com/evantindell

Bireme Capital: https://www.biremecapital.com/


Follow Capital Alliance:

Capital Alliance on LinkedIn: https://www.linkedin.com/company/mycapital-alliance/

Capital Alliance on X: https://x.com/CapitalAll79917

Follow Ken Majmudar:

Substack: https://compoundideas.substack.com/
LinkedIn: https://www.linkedin.com/in/kenmajmudar/

SPEAKER_00

You think there's a certain type of investor who's attracted to shorting?

SPEAKER_01

You do have to be a little bit of a sicko. Apple treated it like five to seven times earnings when you backed out the cash. When if people buy an Apple product, they're buying the software mostly.

SPEAKER_00

That's an interesting example.

SPEAKER_01

Valentine gave us 20 million to start. Now we have 155 or so, which is, you know, kind of rare to have a bunch of kind of like 30-year-old clients in the RAA space. Our biggest winner of the last few years was this company, Airtel Africa. The business has gone from 100 million US of Evitah to it's gonna do like 750 or 800 million US of Evitah over the past like six or seven years with no down users.

SPEAKER_00

How you invest with the party and like what you found to works for you.

SPEAKER_01

I just do that undervalued stocks are caused by cognitive biases. All these quantum stocks, which I personally think are going to zero. Obviously, AI is all the rage for a good reason. There's companies where they have like a crappy little consulting business and they're trying to like slap on a an AI label and then the stock goes up like 5x or something, but it's not really real. Intel is up like 5x. I don't know if I'm convinced that that should be adding like 400 billion dollars to Intel's market cap.

SPEAKER_00

This podcast is sponsored by the Capital Alliance Mastermind, a private community where fund managers share deal flow, build relationships, and grow together. Join the wait list in the first link below. Hello, everyone. Uh welcome to another episode of the Capital Alliance podcast. Um really excited to have my really good friend Evan Tyndall. Known Evan a long time.

SPEAKER_01

I think we first met either was it Value X or I think it was Value X Berkshurst because I hadn't got I hadn't gone to the one in Switzerland uh yet at that point. So yeah.

SPEAKER_00

I actually just recently I think it was in Omaha. We we were we both just finished the first uh Berksh Rathway meeting in Omaha where we also had a couple lines event. And uh I ran into Ethan who did Value X Berkshurst. Yes. And that was like more than 10 years ago, and I said, Ethan, I think it's time for another one. And he kind of like he kind of smiled and he said that he he's gonna do it. I I it sounded like that to me.

SPEAKER_01

No, I I I told him the same thing because he actually still he does um he does these like salons, he says, which so like he does with being events all the time. Um I think they're usually like focused on a particular like research topic or like he's doing one I think on like longevity research um in in Boston. So yeah, yeah, I told him I would I I I promise I would make him a list of people to invite to the next uh he's definitely like uh a very broad thinker, you know.

SPEAKER_00

Totally with very broad interests. It's I I find it really uh anyway. Um so yeah, so let's we we start this podcast typically um by you know uh covering uh our guests' uh you know, backstory. So I guess I'd love to know, you know, where are you from, what your formative experiences were growing up, where you grew up, um, what that was like, what we what your family was like.

SPEAKER_01

Yeah, I grew up in in South Florida, uh Bogertone specifically, which is uh great place to grow up. I used to I used to think that no one had heard of it, but then I found out that like Jerry Seinfeld's parents, I think, are from there. So well they they retired there, I think. They retired there or something or lived there, yeah. Yeah. Yeah. What I didn't realize was that it's actually like the the um the one of the one of like the world capitals of of fraud, believe it or not. Like I do believe it, because South Florida as a whole is uh but even even in particular Boca Cartone, I it's like incredible. I was watching I was watching something the other day, and I I actually used to I used to send my mom when my mom was still living in Boca, I used to send her emails, I would forward them every time there was like a fraud-related thing with Boca Ratone, I would send it, I would send it to my mom and be like, look, mom, another one. Another like FBI is raiding this company that's headquartered in Boca, blah blah blah. But obviously, I wasn't uh involved in any of that, had a very, very nice upbringing. Um the schools are are are pretty good. Uh Florida school, I think the state of Florida doesn't have necessarily the best schools, but the schools in Boca are are um are very good. Um and so yeah, I had a really nice little neighborhood. We would all just go down to the park and play every day. Um yeah, so that's so it's had a you know very great upbringing. Played a lot of sports as a kid. Um that was like my uh you know, and it's funny now because you know, now living in the in the in the northeast, if it if it gets too hot in the summer, people will start saying, like, oh maybe the kids, maybe the kids should be inside, or blah blah blah. But like in Florida, there's no like for example, there's no indoor tennis courts. So so like it's 95 degrees, you're just you're just playing outside. Um so yeah, that's kind of where I I um that's where I grew up.

SPEAKER_00

Uh and is that is that because your family were originally from there or they moved there from somewhere else?

SPEAKER_01

My yeah, my my family actually is you know, there in Florida, there's not too many families that are really like from from from Florida.

SPEAKER_00

Yeah.

SPEAKER_01

But um my uh my parents are my parents both grew up in Florida, which is rare. Yeah. My mom grew up in West Palm Beach. Oh, interesting. Yeah, my mom grew up in West Palm Beach. And my dad grew up in Miami. My dad, yeah, he actually grew up in like a kind of in like kind of a not great area of Miami. He uh he said like he he would always talk about how he um how he had two he grew up in a real tough neighborhood, and there was there was two um it was there was two like welterweight boxing champions that lived in his in his like on his block or something. And so um yeah, my dad, my dad has a wild background, like before he he met my mom. He spent he spent like he spent a I think a uh five or ten years in uh in South America working for um working for a company that may or may not have been CIA like adjacent.

SPEAKER_00

Really?

SPEAKER_01

Yeah, he has the family lore, huh? That's I know, yeah. It's like one of those things where he worked for like a economic consulting firm. First he worked for like a small airline, then he worked for an economic consulting firm, supposedly like um like gathering economic data on these countries. Like it partially was in Cuba and it partially was in another place. Um but like I got the uh I got the I get I got the vibe from his story. I mean he's passed away now, but I got the vibe from his stories that like either he I don't I got the vibe that he didn't he wasn't officially working for the CIA, but like someone that he was passing the data on to was like involved with the US government in that sort of capacity. I don't know. He has some story where uh my dad was pretty tan, but like obviously he's I mean I'm quite quite quite quite white, uh, but he was a he was a little bit tanner than me. And there was he had some story where he was in the cat's the capital city of some South American country, and supposedly some uh some people from the local government were looking for him to like beat him up or something, but they they instead of finding him, he was blending in with the Latinos in the in the restaurant, but they grabbed two Swedish guys who were there, supposedly because they thought they were my dad, who was, I guess, some type of spy. I don't really know. And they like and my so my dad watched them like beat up these two Swedish guys that they found in the restaurant, could thinking oh, okay, thinking thinking that was the Americans that they were grabbing. So that has all kinds of weird um stories like that. So uh it's definitely my plan one day to to file like a a FOIO request and try to get like his info. If I don't know if that's I think I think that's possible, right?

SPEAKER_00

Like maybe I guess so. But I don't know.

SPEAKER_01

I don't know if the government reveals old CIA agents that they've been dead for like 10 or 20 years, like, or is that I think things eventually gonna be classified as at some point. I wanna kind of go back and you know, but so um, yeah, my dad also uh my dad was a uh was an athlete. Like he he was in the Coast Guard, he boxed in the Coast Guard, he played football. It was like he he he was like part of the tryouts for the Miami Dolphins when the Dolphins were like first coming to, you know, this is like probably uh you know 1962 or something when he was like when he was like in his early 20s. And so he yeah, he and then he played on some semi-pro semi-pro uh football teams. Are you are you a only child or you're only only child of my parents? I have a half, I have a half brother. Um he's set 17 years older, yeah.

SPEAKER_00

Did your dad's athleticism inspire you? Because you're you're a good tennis player, right?

SPEAKER_01

Yeah, I mean he I I don't know if it yeah, I'm not sure if it necessarily it it inspired me. Well, I mean, he he was all we were all I was always playing, I was always playing sports with him. So like we would uh we we had a ton of fun. Like he would throw me, like we would just go out to the park that was like down the street from our house, and he would I would like run routes and he would throw uh throw passes to me. Actually, he continued doing that. My dad continued doing that almost until he died, not with me, but with like he would go to the park with a football and just like throw like have little have little kids have like 10 or 12 year old kids like running routes, and he would be like throw when he was like in his 70s.

SPEAKER_00

Oh wow, fun.

SPEAKER_01

Yeah, yeah. So um it definitely, you know, uh uh athletics was always like a big part of my life. Um my dad used to uh the one thing was that my dad didn't want me to play football or box, which are his two sports.

SPEAKER_00

Okay.

SPEAKER_01

So why is that because he got injured, he got injured so many times. Like I and back in his day, like you you had to play defense and offense. Right. Um, and he got he got really beat up. His knees were completely shot um as he got older. Like I he I remember he would he had so many surgeries, and like at one point he was injecting uh injecting stem cells from a from rooster combs.

unknown

Really?

SPEAKER_01

Like the thing on a rooster's head, like they and so yeah, he always he never wanted me to play football or um.

SPEAKER_00

So how did you get into tennis?

SPEAKER_01

Yeah, I got into tennis. Uh I mean my dad, my dad claims that or he claimed that it was like that he kind of pushed me in that direction after doing this some type of analysis of like money to be made, slash like incident, slash like injury risk and like whatever. Although in reality, ten in reality actually you wouldn't push someone towards tennis because it's actually very you have to like tennis is way worse than golf in terms of financially. I don't know if you knew that, but like if you're the if you're the if you're the hundredth best golfer in the world, like you are easily making, you're making like a couple hundred thousand dollars a year, like you're like well into profitability. Um you're the hundredth best tennis player, you are like almost you're like scraping by. You're yeah, you're not even really making a living after expenses, I think.

SPEAKER_00

The problem is like there's I mean, again, like I don't know at the professional level, but I mean there are millions and millions of players. So to be in the top hundred of any sport, like yeah, I mean, like as an as a for instance, I mean, uh for a number of years here, and my kids are into squash, and squash is so much more niche, you know what I mean? There aren't millions of people playing squash, there's probably I mean, maybe in the whole world, but like in the whole world, there's tens of millions playing tennis and golf, you know what I mean? Yeah, yeah, yeah. So to be, and it's still really hard to be in the top hundred in squash or the top thousand even. Uh so it's like in something like tennis or or golf to be Tiger Woods or Roger Federer is ridiculous.

SPEAKER_01

Like it's yeah, I mean, I it's insane. Like I yeah, I I was I was one of the top um I was like the best I got in tennis. I mean, I was I was number one in division three for a while in tennis. Um the thought of like go trying to go pro never really crossed my mind. I was probably good enough that like there was one guy who was in division three who um who I had a I had a winning record against, but who he he beat me the last time we played in in the quarterfinals of NCAs and he went on to win NCAAs, but you know, he beat me in three sets. It was a close match. He went on to he went on to try to play pro. I mean, he did play pro for like five years, and man, that was I think he got up to like 800 in the world or a thousand, but like that's yeah, you're he that's just you know, he that's a freaking grind.

SPEAKER_00

I mean, yeah, it's so if you do that, it's gotta be like a dream, you know, like to pursue chase your dream because like yeah, it's exactly just the odds are so daunting that you know relative to that, like you know, when people talk about like, oh, you know, getting into a top school, like you went to MIT, or you know, like I don't know, starting the investment business or something, the odds are nothing like trying to be number, you know, top 10 or top 100 in any sport.

SPEAKER_01

I mean, yeah, it's it's and and there was at least there was probably like you know, when you get when you're like a thousand in the world, there's like all there's you're you're like two or three levels away from like guys that you can almost never beat are still not making it.

SPEAKER_00

Which is right. That's right.

SPEAKER_01

That that that's the tough thing. It's like you know, you play, you know, you're a thousand in the world and you play a guy who's 75 in the world, and you're getting you're getting smoked.

SPEAKER_00

Yeah, like even in squash, I mean, there's so many levels. Like, I mean, you could be, you know, you you could be forget the rankings. It was nowhere near, but I mean, you know, you you're just slightly worse and you get smoked. Yeah, yeah, yeah. And and there's like dozens of levels above that. Yeah. Yeah. It's very in fact, that was one of my you know, it's sort of like calculuses, right? Uh, I don't know if you you thought this, but in terms of going into like business and investing, is like there's just so much more opportunity. It's it's definitely not a zero-sum game, you know. There's a lot of people.

SPEAKER_01

I mean, yeah, we can well, yeah, we can I mean we can talk about poker um in a second, but like I I I you know, in I got in in college, I got into um, and I guess maybe we should just fully go into that, but like Yeah, let's talk about it. I I um yeah, I guess uh but like one of the reasons why I made the switch from poker to the investment world is because I was I probably was I probably was legitimately top I mean on on like online as far as like online players in the in the realm of like 2006 to 2000 2006, 2007, 2008, like that era, I was probably like top top 200. Um, and you know, you can make six figures doing that. Like it's actually more it's actually probably more lucrative than tennis.

SPEAKER_00

Um was that the same era when like Tom Duan and Isildur were there, or that was later?

SPEAKER_01

Yeah, yeah. Those guys, yeah. That was I mean, those guys had a longer for sure had a longer career than me, but that was yeah, that was in their like heyday. Yeah, yeah, yeah. Those are like those were like the top guys. I was like one of the top players that like you know, maybe like two runs down from that, like like $1,000 buy-in, two thousand dollar buy-in, sometimes five thousand dollar buy-in, like but Duan got smoked after that.

SPEAKER_00

Yeah.

SPEAKER_01

Yeah, he um it's it's interesting. Like poker uh poker's had a lot of of evolution over the years, and it rarely do you see people who um I mean actually since since like the internet age, you you saw yeah, like a many different generations of um like people who are like be would be considered the the top.

SPEAKER_00

Um but yeah, I guess let's we can if we want to go back, we can take it back to uh you know, so go back to MIT first, yeah, and how that led you into poker. But yeah, I mean, people I think MIT is also one of these schools that I'm sure people wonder like what was it like to go there from you know, Florida? It's what did you expect? What was the drive?

SPEAKER_01

I mean, I I um I guess the different like in in high school, um, you know, I went to a pretty good school, uh, not like amazing. I mean public school, I guess now it's amazing. Now it's like a top, it's like one of the top schools in the state, apparently. But back when I was there, it was just like a normal good school. Um and you know, getting good grades was like not that tough. So I was never like really super, super challenged, I think, in high school. Um, and then you get to MIT MIT and it's like there's so every single person that you talk to, because they has like a 1500 plus SAT. That's like table stakes, just to like, you know, being considered for application. And usually there's I have like some other thing that they're that they're good at. Um or there's like some other you know, interesting thing about them. Um or they came from like a top, top prep school or something. And the and and um and then of course then you also have like the the people who are just like complete geniuses, like International Math Olympiad, like whatever, like super, super smart people. Um the interesting thing, I mean, academically at MIT, uh people people maybe expect that it would be um like super competitive, but actually I I would it was almost kind of the opposite because you get there and you went from like being able to coat get straight A's with coasting through high school to a situation where you literally cannot do the problem set. Like there's five questions and you know how to you can figure out one of them.

unknown

Right.

SPEAKER_01

And so they would actually they would they would um the professors would and I'm sure now it's I'm I'm sure now it's gotta be somewhat different in the age of chat GBT where where like these programs can just do all the problem sets, so they have to figure out I actually don't know what they're doing. Um I'm sure that I'm sure I don't either. I'm sure the professors are doing something smart. Um maybe just the problem sets aren't graded and it's all like if I was the professors, I would just move everything to 100% of your grade would just be based on uh in-person like pencil and paper test, and then everything else is just optional. Um that's uh anything else I think is ridiculous um at this point. But but yeah, back in the day, I mean you'd have five the problem set would have five questions, and you know, there's each one has multiple parts, and each each each part is like it's not like just like applying something that you learned. It's like it's like it's like each question is like is like different in a way that like challenges your like core understanding. It'll be like not something that you never are even learned in class, but like challenges like your kind of core understanding of the topic in like a in like an interesting way. Um and and then yeah, you'd kind of have to collaborate. So I mean uh you know, there would just be a bunch of like people who were straight A students in high school, like sitting around at 1 a.m. banging their heads against this some problem set, um, uh and trying to figure out. And of course, you you had you had the you had the like still had the super smart people who could just do it all. Like I had a friend who um who would he probably would have triple majored, um, but the MIT doesn't allow it any, or they didn't allow it anymore when I was there because they didn't want people to overwork themselves. Right. He but he double majored and like just got straight A's and everything. And um, you know, like I like there were some people he he had he had like framed a couple like letters from professors that said that said something along the lines of like, hey, you were by far the best kid in the class. If you ever need a recommendation, like let me know.

SPEAKER_00

Nice.

SPEAKER_01

And when I saw that and I was like, I like this is a thing? Like who like I'd never heard of that before. Um I had two friends that got things like that.

SPEAKER_00

It is if you're like a super genius.

SPEAKER_01

Uh yeah, that that guy, that guy.

SPEAKER_00

Yeah, any idea what happened, what did he do? What ended up happening?

SPEAKER_01

Yeah, it's actually um very interesting. He he um I I won't out exactly what you know what what where where he went and stuff, but I'll kind of give you the rough information. He went home and he he had a uh his dad ran a um uh a a business like uh a car dealership business. Okay he took the the dealership from when he graduated in like the oh oh oh seven, oh eight era, he took it from there from like three color dealerships to like 50 or 60 last time I checked.

SPEAKER_00

Wow, amazing.

SPEAKER_01

So super successful, super successful, yeah. I mean you're you have like one of the smartest people I met in college, like applying his brain to like an old school business, like and like marketing, uh, and like I mean, just I yeah, very, very much how much correlation?

SPEAKER_00

I think it's very high, but how much correlation do you think there is between success in investing or in business and you know essentially raw firepower?

SPEAKER_01

I think like um like 80 percent like 70 or 80 percent correlation, there's something else here like quite a bit, yeah. Quite a bit not everything, but I think investing is is kind of similar to poker, where there's a there's also a different thing. Um, because like I think it I might it probably correlates more to um well I think I think in business in general, there's um there's the raw intelligence, but then you there's also aspects of like uh like like emotional intelligence and like social because like to run a business, you have to be able to deal with people, you have to and this guy also was like super outgoing, like you wouldn't you wouldn't know like interestingly enough, even though he got straight A's and was incredibly smart, you wouldn't even also. Super, super diligent and like responsible, even at like a young age, like way more than I was in college. Like he would be partying, he would be like going out or like do watching a movie or whatever the night before the test because because he would go to every lecture and just like write super diligent notes and like have done everything like completely by himself the whole semester. And so he just knew he was like one of those guys that like just like not only was he smart, but he just, you know. And so that type of thing is also super important, obviously, for for business or any or anything in life. Um but then with investing, I feel like there's this other it's similar to poker where um because good decisions, like good decisions in business are not as volatile in relation to the price of the action. So like for stocks, like like in business, like a good, a good, a good business idea or a good like expansion project or like a good hire, like like whether or not whether you hire someone for a job, they they don't like come to you and demand uh you know a salary of 50,000 one day and a million dollars the next day. You know what I mean? Because because it's there's just there's just like a going rate for that for for that job, and it's just like you know, whether you hire them or not. But in in but in investing, you know, it the stock is at $10 one day and it's at $100 the next. And it's a completely and it has nothing to do, and it's it's more about your it is about how smart you are, but it's also about like how emotionally you handle that kind of like change in the price of the thing.

SPEAKER_00

Um I think is is less about like as of for instance, and I at least I have a bias here, but I I don't know that like for example, most of the best poker players in the world are like super brilliant. Uh no, I don't they're there's yeah, exactly. Intellectual sense, you know?

SPEAKER_01

They're there, yeah. There's and because poker is the same way because because um because the bet sizes change, right? So so being smart enough and kind of like quantitatively oriented enough to um to like analyze that like the and and kind of like humble enough in a way, not that poker players are necessarily humble, but like intellectually humble or like humble like within the game, um enough to you know understand like when the situation has changed and when you need to just like let things go, uh and being and like and and not getting emotional about the decisions that you're making. Um it's like is like one of the most important things. And that's like seemingly uncorrelated to intelligence. Like the number of smart people I know that like can't that like would like refuse to, and I mean, obviously it it's this kind of type of discipline is probably correlated to intelligence, but there's a lot of smart people that can't sit at a poker table um and like just fold for an hour straight because that's the correct thing to do. Like they're just not gonna be, you know, kind of disciplined enough to do that.

SPEAKER_00

Well, one thing in poker that I I play poker occasionally, um, on and off, really, and not at any incredibly high level. But um one thing you definitely see all the time is somebody loses a hand, particularly in like a bad beat, like a hand they should have won, and then they they go on what's called tilt. So the next, the very next hand they'll go all in with basically any garbage.

SPEAKER_02

Yeah.

SPEAKER_00

Uh yeah. So that's like some like as an example of an email. Yeah, exactly. Like that's a decision, right?

SPEAKER_01

Yeah, and yeah, and it's it's probably a little bit correlated to intelligence, but um, yeah, it's it's more about just it's more about just like pure pure self-control.

SPEAKER_00

Um so going back to MIT though, um, I think MIT was very significant, right? Because you met your partner and your spouse, no?

SPEAKER_01

Yeah, met my spouse there, met my um uh I guess when I met both of my partners there, you might say. Um yeah, met my met my wife there uh and met my my business partner there. And I mean, just I mean, and just met a ton of other incredible people. Like it's it's um that I'm still friends with to this day. Yeah You are okay. Yeah, it's it's wild how many um you know successful, smart people you meet at these places. Like what one of um one of my good uh college friends is um is now the CEO of of of uh of Crusoe Energy, which is like a their stock valued at like $10 billion or 15. I don't know, I don't know what it's some outrageous amount. Um I think they're gonna I think so there's rumors that they're gonna IPO sometime in the next year or two. Um it's a private company. Okay. Yeah, it's private. It's it's private company that's valued. I think I mean this is public information. I think it's over, I think it's over 10 billion or something.

SPEAKER_00

Yeah, wow.

SPEAKER_01

And yeah, like when I was in, like um, when I was uh like this thinking about joining a fraternity, the guy that the guy that rushed me, the guy that like was trying to convince me to join one of the fraternities um was Drew Houston, the the four the founder of Dropbox.

SPEAKER_00

Okay. I don't know, yeah, I don't know him, but yeah.

SPEAKER_01

Yeah, he yeah. So that that that's like they're just like that type of people all over all over MIT. And then like the professors. One thing I one thing I do regret, I I didn't, I I think I didn't like fully intellectually mature uh until I was like in until I was like 30 probably in terms of like appreciating I I definitely didn't appreciate MIT uh while I was there. Like that you can like there's this thing called the undergraduate research opportunities, which is called Europe. Um and I mean you can you can you can do research with like Nobel Prize winning professors and get paid and get paid for it. I mean they have to agree, obviously. They have to like want, yeah, they have to want you. But it's like but it's very common. And yeah, and I yeah, just like with things like that, I I definitely didn't uh definitely flip didn't fully appreciate that it was, you know, this was gonna be like four or five years of my life, and then like that type of opportunity is like makes sense, yeah. Just goes away. I mean, it's when you know when you're 18, 19, it's hard to really it's hard to really wrap your mind around that.

SPEAKER_00

But it also you you discovered poker there, so you went as became a professional poker player right after MIT.

SPEAKER_01

Yeah, so I I I would actually say I probably became a professional poker player while I was at MIZ.

SPEAKER_00

Um in terms of the amount of time I was doing any stuff, like uh you know and just to calibrate like time frame, like what year did you graduate?

SPEAKER_01

Uh so I graduated in 2007. 2007. So it was like yeah, like 2004 to 2007, I was playing a ton of poker. Yeah.

SPEAKER_00

Um what led you to that? You were just making money while you were playing online.

SPEAKER_01

So we like me and some other guys in my fraternity would would would just play and and other people around MIT would just play like house games like each other, right? Yeah, we play with each other, and then we would we would yeah, we would I mean some of those games are pretty intense.

SPEAKER_00

Um that's not necessarily a way to get really good really quickly, though, right? So you must have how did you get better at it quickly?

SPEAKER_01

So the way I mean, so the way I got better was one, I mean, was just playing. Um, you know, playing in person. That that you know that can do a little bit for you. Then I started a buddy of mine had uh uh his name Jesse Chandler was his name. Um the odds of him watching this podcast are I don't know, maybe they're not, maybe they're not zero. He's actually, I think he's still I think he's in the finance world uh still. Um but he would he would play on a website called Pacific Poker, which which was even pre-date party poker, I think. Uh and I would just watch him play like literally one dollar, two dollar limit hold them on on like in between classes. And that started like that started like getting me really interested. Then um uh a a buddy of mine got a job in in Cyprus of all places, uh, which he um which he thought was gonna be like a computer science or electrical engineering job, but it ended up with him uh getting up on telephone poles and like having to like repair like electrical like telephone wiring or something. So anyway, but while he was gone for the summer, he gave me, he let me use his like the like $300 he had on party poker. And he basically was like, he basically was like, look if you if you lose it, you just have to pay me back. And if you win, if you win money, I'll just like I'll just like send you whatever you win, like whatever. Um so uh which was nice. Um he obviously trusted me to pay him back, uh, which was good if I lost. And I ended up, I think I won a couple hundred dollars. Um and then I started then that was like 2000, that was probably 2003 or something. And then from there, uh just kind of ran that, ran that up on party poker and and and other websites, but um into you know, into the thousands, into the tens of thousands. Um, what actually caused me to improve a lot in in in poker was well, I started reading books. I started reading books, and there's um there's this book called The Theory of Poker by David Sklansky, which is like a seminal book in in the poker world, just kind of takes you into the numbers, you know, behind like if the pot is this big and someone bets, like how often should I call? What how often should I bluff, like in terms of the numbers, like and and you know, then you kind of take it from there on and he kind of develops the theory of of how to play poker, like what types of hands you he was a pretty good poker player himself, right? Yeah, he was a pretty good poker player. Yeah, yeah. Um and then, but then actually that that book is good. Um, and there was a couple other ones by the same by his publishing company. But then what really took it to the next level, uh, the next like few levels, was um was their like website of the publishing company. So they had a website which had a forum and people would post uh people would post hands that they played. And then you would get like really good players in there talking about like not just like what they would have done, but like how they would think about the hand. So it would say it would say, you know, uh, I raised with Ace King and the flop came this and I bet and this guy raised, and here was my description of him, and like here's what blah blah blah. Yeah. Uh and so that's I think where you really get into like just hand after hand after hand of like reading and and um you know talking about about uh about poker. Uh I probably had a I have since lost my I don't remember what my screen name was or whatever, but like or and like and like I lost since have since lost my password, but um I had a I think I had a couple thousand posts on there um just talking about just talking about different different hands. Um and you know, and I and that besides my own posts, I would besides when I would post a hand, I would like comment on other people's hands and you just kind of talk through it. Um and yeah, it's weird because in in poker, there's a lot of bullshit. Like there's a lot of books that you can read, at least back then, that would have like kind of like non-quantitative mumbo jumbo, like rules of thumb, or like kind of like superstitious type things. Or it would be like, oh, there's six different types of players the hedgehog, turtle, and you know, yeah, right. Yeah, yeah, you know, border on the like totally superstitious to like do like only moderately useful. Um then and then you had this one publishing company where like all the books were good, all the books were like grounded in some type of rational thought slash like numbers, and then you combine that with the the the websites, and you know, then then you're you remember the name of the company? Yeah, two plus two pub publishing. Yeah, two plus two. Two plus two. I don't know why I don't know why they they called it that, but yeah, I think the forums are still the same. I think the forums are still and and and actually the way I kind of describe like how I got into value investing is like related to that. Um so so you know, once I once I started making some money from poker, I ended up after after college, I decided like not to well, first I thought maybe I would go to law school. Um, I think I still would have enjoyed being a lawyer. I mean, you you would know better than me if I wouldn't have enjoyed that, but um I decided instead of going to law school, I was just gonna keep doing the thing that was already making me some money. Um and so yeah, I played poker basically basically full time in like 2007, 2008, 2009, uh beginning of 2009 era. And then but you know, when uh like in any business, when you um once you are profitable and you're like setting aside some money, you have to figure out like what do I what do I do with that money, right? So um, you know, if you want to seek out a financial advisor, you could call someone like like yourself or me. We're we're happy to help, right? Or you can try to learn on your own, which is what I which is what I did. Um and or both. And that's when I actually contacted my my my well, then he was just like one of my friends from college, but he his dad had run a fund for like a decade or two. Um, and so he was like grew always grew up around investing in stocks and stuff. So he was kind of known in our circles as like the guy who knew about investing. And so I, you know, I think I kind of had him, I was like, hey, like I want to learn more about investing. Like, where should I, what, where should I kind of turn? And I think he at he at that point put me on onto Buffett and the whole you know value investing canon. And almost immediately it kind of it kind of spoke to me because it it was a it felt like a similar you know group of ideas that were, you know, a bunch of like a rational framework within like a larger soup of like nonsense, if that makes sense. And also in investing, there's all kinds of books, um, you know, from like stuff about technical analysis to uh you know, there's all types of nonsense out there. But then there's value investing, which is kind of like the okay, let's break it down. What is does it actually mean to invest in a company? Okay, it's about like this future stream of dividends and free cat and free cash flow that you're gonna get. Okay, well, how should we think about that? Like where do opportunities lie? Like blah, blah, blah. So yeah, value investing kind of spoke me immediately. Um, and so I was kind of doing that on the side with my own uh with my own money. And then when my buddy, when my buddy graduated, he was basically like, you know, he well, he was deciding, he had a bunch of his friends went to New York to do various, various things, mostly finance. And he was deciding whether to either go to New York with all his friends, other young people with like an analyst class, etc., or go work one-on-one with his dad in Avon, Connecticut. So he basically he basically told his dad, listen, dad, if you if you want me to come work for you, like you have to you have to hire at least one other young person so I can, you know, have someone within like two decades of my age uh around hanging out with. And so that was me. Um wow. Yeah. So that's so we started working for his dad in 2009.

SPEAKER_00

And then yeah, I was basically So that was two years after you graduated.

SPEAKER_01

Yeah, two years after I graduated, yeah. So that was 2009, and then we we um we worked for him straight through to 20, like late 2015, which is when we started um, you know, thinking about starting the new the art. Just basically bringing it. So what did you so well talk about that work experience, what you learned, and then and then let's jump forward to starting your own why and he um, you know, I I I I learned, I guess I learned what it means to actually, you know, not just invest your own money, but like, you know, have like um because I I was back when I was just you know, 2007, 2008, I was just, you know, I was mostly playing poker and I was kind of investing on the side. I was, you know, looking at an idea here or there, but nothing super formal. Uh I wasn't building Excel models or anything like that. And then, you know, at at at Valentine Capital, where I where we worked, I kind of learned, you know, how to build out, I guess, and how to like build out my own investment process. Like I tried, I had to figure out like, well, what type of stocks am I really interested in? Like, how do I want to go about um you know quantifying what I'm looking at? You know, I kind of figured out my process for um, you know, build working out Excel models for just like researching companies, taking notes on companies, uh, and all and all that stuff. Um, you know, and and as well as learning about, I mean, I wasn't making a ton of this the decisions, but it was um as far as like what to invest in. But it was nice because my former boss, Steve Ballantine, he did, he did give us a lot of autonomy as far as like if I brought him an idea that I thought was good, he would he wasn't resistant at all to like to like just putting on the position. Like obviously I had to I had would have to convince him. Um, but you know, a lot of my ideas uh did did get into the portfolio, which is um which was which was fun in the beginning to see. Um yeah, we uh we also did we spent like six months probably with 80% of our time spent like sh spent shorting um shorting Chinese reverse mergers, which is a whole interesting lesson. Yeah, we um it was like back in the in the like the heydays of or I guess maybe not the heydays, but the beginnings of of Muddy Waters, if you know, if you know that for Yeah, yeah, Muddy Waters is um, yeah. Yeah, they was like the start during their like starting period, like 2010, 11, 12, 13 kind of and I've spoken to the founder there. Okay, yeah, Carson Block, yeah. I never I never Carson, yeah. Yeah, I never talked to him directly, but um I definitely followed his research uh very intently and would try to replicate certain things that he would do. Like we would um we had a person in you know we had a person in China who would pull filing, who would pull local filings for us because there were all these Chinese companies that were publicly traded in the US, but their business was in China. And so you could check up on, I mean you had to be a little bit careful, but you could check up on how the actual uh pro the subsidiaries in China that were supposedly doing hundreds of millions or billions of dollars in revenue, what they were reporting to the local authorities in China. And a lot of times a lot of times it was like almost zero.

SPEAKER_00

Really?

SPEAKER_01

Wow. Yeah. And um, you know, so then we then so through that process I learned all about like you know, the kind of the business of shorting, which is which is uh, you know, first of all, very difficult. Even if you know things are frauds, it's very difficult because you have to manage you have to manage the borrow rates. I mean, back then especially like stuff would have very high borrow rates if it was like an obvious fraud. Um interestingly, interestingly enough, like I think nowadays like it's actually shorting is because because people have done so poorly at shorting over the last like 10 years, like it's just been a terrible idea to be like running in front of a freight train um or standing in front of a freight train, I don't know. Um you know, because of that, the borrow rates are just much more reasonable. Like you can borrow, like even though like there's all these quantum stocks, which I personally think are going to zero, but uh you you can buy you can you don't have to pay a borrow rate anymore.

SPEAKER_00

Like quantum computing, you mean?

SPEAKER_01

Yeah, quantum computing stocks.

SPEAKER_00

Yeah, yeah. Yeah, yeah.

SPEAKER_01

Um, like back in the day you had to pay borrow rates, uh, which was always tough. You know, you'd have you know, you'd have five stocks that'd be short and four of them would turn out to be frauds. The one that wasn't fraud would like like would for sure double on you, so then that hurt you. And then the other ones you're paying borrow rates um that were maybe 20 or 30 percent. So that makes it tough. Then it costs one one time, one time I mean this was the worst. One time a com a stock got halted. I mean, basically because it was a fraud. Um, although I don't think that was like explicitly said anywhere, but like it basically was a fraud. Um and the broker kept trying to charge the borrow rate the whole time it was halted on on on the mark on the former market price. So, like, you know, you have a stock that's a 500 million market cap or something, and the stock there's a hundred million shares and it trades at five, and then you shorted it, and it's definitely like when it's if it opened, it would trade at like pennies because it's it like what is a it was like revealed to be a fraud.

SPEAKER_00

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SPEAKER_01

Who's like who's what's a shorting? Attracted shorting or like who's good at shorting?

SPEAKER_00

Yeah, wants to short given even given the long and challenging aspects of it.

SPEAKER_01

Yeah, I mean, you you you you do have to be a little bit of a sicko. I mean, I I I am just a very kind of cynical or like non I don't I don't believe things very easily. Like my my my wife will get annoyed if like someone will someone will tell me something and I'll be like, eh I don't, I don't, I don't actually like like you know, someone that we met said they I I don't want to get into details, but like yeah, yeah, like someone that we met told us something and I was like, I don't believe that for like X, Y, and Z reasons. So I'm just I'm I'm I'm just a little bit cynical like that. Um and so and also like it it's it there's something um there's something a little bit addictive about um the research on the short side. Like if you can especially back in the day like nowadays I almost feel like there's there's so many there's like so many potential targets for shorts that like that don't have that like maybe have questionable business models. But it's like just it where even though like you think maybe it's obvious it's just more about managing the fact that like it could become a meme stock and like triple in your face. And that's like not that exciting but like what used to be exciting back in the day was you know the due diligence process of like figuring out like oh I hired a guy in Beijing to pull the local or Shenzhen or something to pull the local uh SAIC filings that show the company as a fraud and blah blah blah blah blah like that that was like super um that's just super fun. You know like that's like really like you know turning over the rocks um who is it is it AMC that's buying eBay now or making an offer or something oh GameStop yeah yeah yeah GameStop right that was using the two the two meme stock meme stocks right yeah I mean you can just look at those you know some of those valuations and just be like this is so this is so ridiculous but you know but of course profiting from that is a whole is a whole is a whole different story.

SPEAKER_00

And um so yeah so how how did that evolve to okay we're gonna start our own thing and talk about what you started and why and why you did it when you did it.

SPEAKER_01

Yeah so uh in 2015 or so um our old boss was basically you know he he basically decided he wanted to uh I I've just I have described it in the past as like he decided he wanted to kick us out of the nest and see if we could if we could fly and you know I think that he felt like he had he had mentored us enough and you know for for both his his son's sake and my own like it would just be better if we uh if if if he seeded us um and we kind of went on on our own and could you know grow to do whatever we you know just kind of see what we could do on our own. And of course you know you don't very often get in in the investment world like having someone seed you or give you like your first capital is just uh such an incredible opportunity. So I'll forever be be um thankful to uh to him for that. And yeah so he gave so yeah Steve Ballantyne uh gave us 20 million to to start um back in 20 early 2016. Uh nice and yeah and so we we started the firm Birium Capital in the beginning we had a few different investment strategies we were doing um you know one was like my stock picking strategy and then we also had some uh some some more quantitative focused strategies that my business partner was running um back in the day and then over time we kind of circled the wagons around like my my long short stock picking strategy which is what we what we do now. And yeah so we've taken that um you know we've taken that that 20 million and now we have 155 or so yeah and it's just been kind of a slow slow grind of you know returns plus uh you know the occasional new client who either like in the beginning it was meaning it was friends and family I mean one one nice thing about um about mit is like in in 2016 I was 32 and by then like a bunch of our peers had already made enough money that they could that they could give some to us. Oh that's good. Which was you know kind of rare to have uh a bunch of kind of like 30 year olds clients in the in the in the in the RAA space but like it it we were we were lucky that that was that that was the case. And obviously we were also lucky that they trusted us with with that money because that's another yeah um another issue.

SPEAKER_00

So in the beginning with so talk about yeah the the process of and what's your investment what you've learned about investing in that process.

SPEAKER_01

Yeah what I've learned about investing or or like or what I've learned about like the business of investing.

SPEAKER_00

No the how you invest with bi remail right um what you might to works for you.

SPEAKER_01

So uh the way I pick stocks I have I have this theory that basically undervalued I mean in a sense it's kind of a tautology but um I have this theory that undervalued stocks are caused by cognitive biases. And you know while there's while there's you know errors being made all the time in the stock market mostly they cancel out and so it mostly prices are pretty efficient. But occasionally you have a situation where some type of cognitive cognitive bias causes a a majority of market participants that you know even know about whatever stock it is to make an error in terms of the the price that they're that they're willing to pay for it. So it could be um a classic example is uh availability bias which is where you give undue weight to things that are more newsworthy and more like more available to your to your mind. And so like yeah more newsworthy more prominent um and so maybe you don't but maybe people don't notice like what's what's what's really underneath the hood. So like an example of that um potentially is like you know we invested in face in in Facebook back in the day before it was meta during the time when they had the whole um the whole Cambridge Analytica scandal which was when uh the Trump and the Trump campaign hired this firm in the UK to kind of like mine uh meta data well Facebook data to create profiles on on voters they didn't really it didn't even really work for them but like people just like started freaking out and talking about canceling Facebook canceling the Facebook accounts whatever and after a lot of research it just we just realized that it wasn't going to impact the business in the long term and it was just like the newsworthy thing that but the business had underperformed the NASDAQ the SP and NASDAQ by like 30% or something like that over that year. That's back in like 2018. That's an interesting example so what are good like what are what are good sources of ideas for you given you have that theory that there's I think I'd say every generate every like little bias has like a different kind of like place you should probably look I mean um you know there's there's what I would call familiarity bias which is just like it's kind of in the name it's just like being biased towards things that you are familiar with that you know well like the like a a version of that is the home country bias in investing where people just want to invest in the things that they you know like their own their own country. When you combine that with uh what I would call extrapolation bias, which is the the the bias towards like just assuming that like current trends continue forever you combine those two things and I think um they they they created an opportunity in the you know the last couple years to really look outside the US for investments because the US markets have been doing so well for so long and everyone just agreed up maybe maybe in the last year it's kind of this vibe has kind of shifted a little bit as far as like for stock returns um although maybe not um you know that was an opportunity I thought to uh to look outside the US whether it's you know we have investments in Africa we have investments in um Latin America we have a huge huge position in Japan and and so that so so that's that that that's kind of those biases like where they point you then there's um there's one that I call well there's one that's called representativeness bias uh or I I like to I prefer lazy grouping bias which is the bias towards grouping things or I guess in this case stocks or businesses um in a kind of lazy way that doesn't like drill down to the details. So like the bet the canonical example of that is Apple being valued like a hardware company in like the mid 2010s. I mean 2012, 2013, 2014, 2015, Apple traded at like five to seven times earnings when you backed out the cash and I think the reason why mostly was you know people were like well see they they they sell the literally the the the argument was like no deeper than they sell phones and computers and like look what happened to the IBM laptop business and the and the Nokia phone business. Like aren't these terrible businesses? Because literally the package that you buy it in is a piece of hardware. And there is and and and it is true that like the problem that the the tricky thing is there's a lot of times there's some truth to it right like so you have to figure out like where does the where does the the truth of the the situation turn into a bias in terms of how it's an impact on evaluation. Like if Apple was you know if the SP was at 20 times and Apple was at 18 times, you know maybe that wouldn't be true. Maybe this wouldn't be really be a bias. But the thing is the market was at 18 times and Apple was at six times. So you know you you start digging deeper and you realize well wait when people buy an iPhone are they paying are they they're they're paying like 20 or 30% more than the equivalent hardware in an Android phone like and that's why that's why Apple's gross markets are are are so substantial and they're not at all they're not at all in line with what Nokia's phone margins were. They're like triple and eventually you I mean it doesn't shouldn't take you long people long to realize like if you really think about it they're buying the when the people buy an Apple product they're buying the software mostly like they're they're they're they're buying iOS they're they're buying you know the ability to have a blue bubble when they text people they're they're they're buying the ability to have their mom be able to FaceTime them um when they need to as opposed to having to download WhatsApp or something. And so from a valuation standpoint Apple was just grouped in with these other businesses that you know the financial statements and the the growth and the returns on capital really were very different then. And so that's so for those companies I think you have to look for um you know the place you look is like just you just keep you just keep turning over rocks you just look at take everything that's pretty that's like cheap, cheaper than the market and just keep turning over rocks until you find something that's unique. Then you have to analyze like okay it's unique but is it in a way that makes the valuation is it in a way that people are misunderstanding and is it is it in a way that causes the valuation to just be like very off um and so like other other ones where I've I've found that be the case is businesses with um with multiple like very different segments. So like for example our our our biggest winner of the last few years was this company Airtel Africa and they it's a telecom business you know has one sort of profile but then it's also has this mobile money this this this mobile money business where their money transfer product is the backbone of the economy of like 14 different African countries and is grow and it's been has been growing 30% for a decade. Like the business has gone from a hundred million US of Ibata to it's going to do like 750 or 800 million US of Ibata over the past like six or seven years with no down years. Like just the mobile money side 20 to 30% growth. Yeah it's unbelievable just the money side yeah just the money side they've gone from like you know five to 10 billion of annual transfer value to um they're now in the latest quarter they did uh like on an annualized rate they're doing 215 billion US dollars of transfer value and what what's the market cap of that company now is well yesterday or today because it was up like it was up like 10% today or 12% something crazy. But it's like around like 20 billion still pretty small yeah so it's it's yeah I mean it's it's it's still like you know it's maybe 20 times EBITDA on like a couple years out of the mobile of the mobile money business. So it's not crazy. Yeah um and then you have the then you have the whole telecom business which is another an another growing business. So it's actually growing yeah yeah so people Airtel was uh an Indian group I think it is we was up so much today they actually made a very interesting announcement um where well so okay let's just stick a step back so there's Airtel Africa um and then there's Barti Airtel um right the the parent company the Indian and over the years when it when they first when they first bought it they or when it first either re-IPO'd after they bought it from the or just when they first bought it they had like fifty had like 55 or s or 60% ownership. But then over the years they've been doing three things they've been buying back stock the parent the parent company has been buying shares more shares little by little and then also the the the family uh so the metal family that is the that controls barti airtel right they actually through their through their Mauritius family entity have bought up about have bought up about 16% of the shares so all in the company has gone from like highs to like 70 like 8% controlled by um the metal family in various forms. Got it. And what they announced what they announced today was that uh Barty Airtel the Indian company is is having a meeting in two days and what they're one of the things they're gonna consider is further consolidation or restructuring of some of their subsidiaries including specific specifically Airtel Africa. So people are s are are speculating that they're basically going to try to buy out the whole thing or well there's gonna be some type of offer.

SPEAKER_00

Got it yeah so it's interesting a little bit complicated but yeah that's that's that's that's another one that that kind of fits that mold of so I know your fund has done really well um and you I guess it sounds like you have a very large percentage out what percentage of the fund is outside the United States?

SPEAKER_01

Well the shorts are basically all in the US so we're like net so we're heavily net short in the US I'd say I mean we have a probably we have probably probably you know 10 to 20 percent of the probably no maybe like yeah 20% of the longs are in the US and then okay and then like 90 90 or 100% of the shorts so you know the shorts are like 40% of NAV so um you know you end up being like net short like 20% uh US okay and I know Japan is another big area of interest uh but I I know you probably noticed uh the Buff Buffett and Berkshire owns a lot of these uh Japanese trading companies any thoughts on those the j the trading companies are interesting I mean they they I actually um funnily enough I I bought um in my daughter's Coverdell account this is this this one where you can like just put out like $2,000 a year in um and it goes that goes towards education expenses but it compounds tax free. So I wasn't like you know it's two only two thousand dollars so I wasn't like taking it that seriously but I actually I bought Itochu which is one of the um one of those trading companies like this is like 10 years ago or something and that's done super well. I was just like you know what these Japanese stocks are cheap. This is before Buffett did it um and so when he when he came through with a trading company I was I was I was like ah this that validated my uh investment and it's done super well I mean I for the for um I never got enough of an understanding of of really how those particularly those trading companies worked and fully understood them well enough to to back it as like a 10% position in like my in in in the business for buyer in capital um you know which involves like you know putting to work like you know 10 10 or 15 million dollars I never I never got completely comfortable with with those businesses for the firm but um yeah it's just indicative of how many cheap things there there were with like you know like if you look at their if you if you had just like eyeballed their the their financial statements and and asked like where should this thing be trading you would not have said six or seven times earnings which is what they were trading at back when Buffett um and what about now what I know the Japanese market has improved and also government it's improved um honestly up until up until this year we had not we had not done that well in Japan like most of our returns were not I mean not not only like one or two of our you know we probably invested in like uh eight to ten different stocks over the last couple years and only like one or two of them really re-rated um and so I I really felt like I really still feel like there's a lot of opportunities there. Um and just in the past like few months we've had a couple really re-rate um which has been interesting. So um but still I mean when they start out when they start out so cheap and they have a bunch of net cash and stuff like even if they even if they're up 50 60 70% like sometimes it's still like we haven't actually haven't even sold the ones that have re-rated yet.

SPEAKER_00

Yeah.

SPEAKER_01

And I think it's one of the currencies that potentially is undervalued too so that double yeah I mean I I um I was like stopped not stopped dead but I was like I was like very intrigued when I saw that Paul Tudor Jones was on the Invest Like the best podcast. Exactly and I saw that he said something about the yen and I was like oh I'm gonna look into this now because I because people ask me all the time do you hedge the yen exposure? And I say no. Yeah yeah yeah and I say because like what Buffett did was interesting was he just he was hedged in the yen and because he just borrowed you know he borrowed at like one percent invested in the stocks um and then you know he's he's essentially hedged in that way um yeah and he is paying a small borrow rate but like you know the dividends are more than covering that so it's like it's all it's all gravy I decided to not do that because I looked at you know you go to Tokyo and you get a really nice hotel for the equivalent of like $150 US in in like downtown Tokyo and you're like hmm in New York this would be like $500. Yeah clearly and maybe that's a little bit of an exaggeration but it's like it's significant it's like I mean Tokyo used to be one of the most expensive places in the world.

SPEAKER_00

It was and it was the most expensive I think it was the most expensive in late 80s to early 90s.

SPEAKER_01

Right. And so since then I mean you've seen like on a purchase purchasing power parity basis the yen was completely moved um in a way that I don't think is really reflects the value of the the currency and the diversity of the economy and things. And so yeah so Paul Tudor Jones was like on his on that podcast was like he was like yeah the way I view investing is kind of like a bunch of periods of like multiple years of like information gathering and like single like trying to hit singles and not lose money and like few percent here or there and you know maybe with some leverage you can turn into like mid-single digits right I you know I don't mean to want quite into those numbers like that but that's kind of how I interpret it. And then he said and then occasionally every every few years you get a situation where a huge opportunity presents itself because something is really undervalued and there's a catalyst. And that's when he he uh he described the the new um you know the new prime minister in Japan and and how uh you know that could you know how she could be basically like a a Margaret Thatcher type type person and kind of drive the currency back to some that was one of the tough things about Japan is the culture is is quite sort of insular and slow moving and so yeah I don't I think like the normal velocity of things but it now it's been it's literally we're talking like into the fourth decade of like basically like a down you know right economy after after many decades of a boom. Yeah finally I think there's finally some yeah you didn't you didn't um you didn't break above the all-time highs in the Japanese market until I think a year or two ago. Like the market was basically flat um between like from the peak. But I think it was I think it was flat between early nineties it was when yeah from like not from like 1990 from the peak in 1990 to like to like 2022 or something I think it was the market was basically flat.

SPEAKER_00

And there it was there was a point I believe when the just the land and the Imperial Palace which is just a part of Tokyo was worth more than like all of Manhattan at that same time. Or like yeah it was something ridiculous or was like yeah worth something at least in theory like it wasn't for sale I thought I think I actually thought it was like yeah I think I th I thought it was maybe even like something crazier than that.

SPEAKER_01

But yeah it was something price per square yard or square meter that's nearby. What I was wondering about that was like how how do they know what that's worth? Because like I guess they look going by like areas around the inverse no that's what I'm saying like like the area next to it I think is called Ginsla.

SPEAKER_00

So like if you look at like something crazy Ginza and it was like it's not an actual like obviously value like but it was just like an imputed value. Yeah yeah yeah yeah yeah yeah you're just multiplying the get price of Ginza multiplied by the square footage in the Imperial Palace and whatever yeah so obviously you're one of the um you know founding members in Capital Alliance founding member in the sense of one of the early members and uh this is the Capital Alliance podcast. Um obviously you you go to other events. I mean I met you at Value X and uh it's a community that's growing um just wanted also to touch on uh sort of like what what that experience of this community has been like for you and what um what you would say to somebody who's considering it or or you know is trying to grow fund, et cetera.

SPEAKER_01

The nice thing about Capital Alliance is that it's structured differently than the other uh conferences that I go to I mean the other conferences I go to kind of you know run the gamut from you know informal like at Berkshire Hathaway like there's no there's no organization to the to the to the non to the non-Birkshire stuff. It's just like people doing whatever events, you know, it's just kind of a a shelling point for people coming together. But um but capital and and then there's also like the idea based events where everyone's pitching an investment idea and those are great too. Um and that you know can get it can also involve like really good networking and meeting people and stuff. Um but the nice thing about Capital Alliance is like it's like a small kind of handpicked group of people who are specifically coming together to kind of promote the development of the other people. So um a lot of us are kind of in a similar, similar range of you know, from people who are just starting up their investment businesses to the kind of like, you know, couple hundred million to maybe like a billion in in AUM and and looking to kind of drive the next like level of layer of growth. And, you know, at these other conferences, you're not necessarily wanting to be super vulnerable and you know, you're maybe you're talking to potential clients, or you're just talking to the public at large, or you're meeting someone for the first time, and you're not necessarily wanting to like burden them with your problems of like, you know, how do I, you know, I'm having this problem with a potential client, or like this is like, you know, I'm worried about this in the business, or I have this thing in my personal life that's going on that's like distracting me from work or just causing a problem. But the way Capital Alliance is structured, it's basically like everyone knows that you're coming in and you're like, because the other people are gonna be talking about their, you know, potentially slightly embarrassing or maybe off-putting to some people like problems, you're more willing to do that uh yourself under the guy under the idea of like, well, if we're all saying embarrassing things, then we're not gonna be embarrassed with each other or just you know, honest or whatever, or vulnerable things. And you know, that's powerful because then you can get um, especially if people are are trying to like go out of their way to uh to help each other, that can be a powerful thing in the room where everyone's just kind of, you know, they're taking that, you know, because you don't you don't want a situation where every day people are bringing their problems to you, but like, because you know, people have a lot of problems and you only have so much time, but like when you spend like uh, you know, a you know, a few days uh for a get together a few times a year, then you can have that sort of like concentrated interaction of like let's okay, let's try to like work through these issues that we're having, and we're all gonna do it together, and it's gonna be, yeah. So it ends up being, it ends up being, you know, pretty, pretty valuable, I think.

SPEAKER_00

Um yeah. Well one interesting thing that I've found is that uh it's a little bit of a different model because it's like uh supported by the membership. Uh and so I found I guess it it makes sense because I was similar, but like I I do find that folks have a hard time wrapping their heads around the fact that they actually have to like support it with resources. Uh and yet they're all like fund managers and capitalists and like you know, trying to basically invest in companies that are actually like, you know, successful and you know, generating good returns on things. That I just find that to be an interesting dichotomy. But like I said, like I was the same, like for some reason, I personally didn't want to invest in things until like I had that epiphany of like going to the mastermind that inspired the capital alliance. And I invested quite a bit in that and I got so much benefit out of that that I was like, oh, I was being short-sighted, you know. I was being penny wise and pound foolish. Yeah.

SPEAKER_01

Yeah, it's it's you know, it's it's it's tough because you know, when you're you're uh running an investment business, it's hard to necessarily want to add on like an expense of like X thousand dollars, but then but then you know, if you can it it for sure pays for itself if you're able to um you know generate any type of extra traction or you get like one good idea, or you know, I mean it's you know in business it's dangerous because you can you could theoretically keep layering on like many of those like expenses and like and and and sort of dilute all your profits, but I think for me the capital alliance has been a good um has been a good investment in that way in terms of like it's like you know one of those rare things that I that I did end up uh saying yes to and and and make investments.

SPEAKER_00

Yeah, yeah. For me, I mean I agree with you. I mean I but I I guess where I was always like too careful with yeah, I wouldn't invest in almost anything. And then it turned out that relationships and insights and like you know that saying of like uh you you become the average of the people you spend time with. Yeah. And like you could spend a lot of time trying to create that group, or you could just like parachute in and basically start participating. I, you know, and then I have this other RD of like the surface area of luck. I seem to keep getting lucky because I keep having these sort of like surface area like increases just by being around good people, basically. Yeah, that can happen in multiple places, obviously. That's one of the reasons we all go to Omaha too, you know?

SPEAKER_01

Right. Yeah. No, I think I think I think there's a lot, I think there's a lot to be said for that. And uh probably uh especially investment managers who you know don't have a big team and they're they're you know kind of you know doing their own thing, like uh maybe with like one or two sports staff, whatever, like yeah, just increasing that surface area, it's probably probably never a bad thing.

SPEAKER_00

Uh the last thing I want to touch on is you know, a lot going on in US markets. Uh obviously AI is all the rage um for a good reason, right? We all use it. Um probably a topic for a different time, but um what uh any thoughts on what's happening with, you know, I mean, you've seen anything AI related lately. It's been the the microns and the um Sandus comp type companies, the chip makers, anything with chips. Uh this is companies that have gone in a year up like 10x, 20x. Uh you know, Bloom Energy is another one in the energy sector. So there's where are the opportunities and what's happening right now?

SPEAKER_01

You know, more on the short side or I mean yeah, it's it's we we have tried to mostly stay away from things that are like super directly AI related on the on the short side, except except where we think that like the the the AI like washing is like just completely fraudulent. Like like Micron, it's like well they their business really is being affected by AI. There's like there's like on the other hand, there's companies where they have like have like a sh crappy little consulting business and they're trying to like slap on a an AI uh label and then the stock goes up like 5x or something, but it's not really real. Like those are those I think are the are the short opportunities people should people should look at. Or, you know, I mean uh I don't know, like like the other the other thing I've been poking around potentially, I haven't pulled the trigger on this yet. Um feel free to if people have feel differently, feel free to send me uh your thoughts on it. But is I mean Intel is up like 5x. And I mean, it will there will be gains to like the number of CPUs that need to be sold um as people are like running more agents and things, but I don't know if I'm convinced that that should be adding like 400 billion dollars to Intel's market cap, given how much they've given that at the end of all this, they're still gonna be behind TSMC like uh significantly.

SPEAKER_00

So But T is MC is like a trillion dollar company now, right?

SPEAKER_01

But CMC is just really yeah, but but but Intel, the market cap of Intel is like halfway there. The market cap like it like the market cap of Intel is 500 billion, really? Yeah, dude, you go look at the chart of this thing, man. But the market cap of Intel is like is is is I believe over 500 billion dollars right now.

SPEAKER_00

Well, thanks for uh coming on to the podcast. It was great to have you. Yeah, and uh appreciated you taking the time. Yep, thank you so much, Ken. Appreciate it. See you later. Bye. Thanks for watching this episode. Click the screen to catch our past episodes with Asif Saria and Matthew Peterson. And to apply for the Capital Alliance mastermind, hit the first link in the description.