Yuri Khodjamirian, CIO of Tema ETFs, discusses his unique approach to Moat investing, including identifying companies with durable competitive advantages. He covers various types of moats like economies of scale, network effects, and non-replicable assets, and explains how these advantages apply to different industries. Yuri shares insights on Tema's investment process, blending quantitative and qualitative analysis to construct portfolios of high-quality companies.
Identifying moats based on market share, tangible assets, durability of returns, differentiates Tema's approach.
Investing in moats leads to high profitability, defendable returns, and business sustainability through high margins.
Different types of moats create barriers to entry in industries, emphasizing economies of scale, network effects, physical assets, and switching costs.
Deep dives
Tema's Unique Approach to Identifying Moats
Yuri Kajomerian, CIO at Tema ETFs, explains how Tema's approach to identifying moats differs from traditional methods. They focus on companies with dominant market share, tangible assets, and long-term durability of returns. These moats include economies of scale, strong network effects, non-replicable physical assets, regulation, and high switching costs, offering insight into different industries and risk evaluation.
Advantages of Investing in Companies with Moats
Investing in companies with moats provides high returns on investor capital and durable, high-profitability stocks. Moats signify defendable high returns and profitability, creating a financial advantage. Companies with moats enjoy high margins, making it easier to invest in the future, fend off competition, and ensure business sustainability. The durability of moats is crucial, often surpassing the width of the moat in long-term profitability.
Exploring Types of Moats and Their Importance
Analysing different types of moats such as economies of scale, strong network effects, non-replicable physical assets, regulation, and high switching costs highlights key barriers to entry in various industries. For instance, economies of scale reduce average production costs significantly, while strong network effects exponentially increase network value with each addition. Non-replicable physical assets like railroads and high switching costs in industries like aerospace create substantial competitive advantages and enduring profitability.
Antitrust Authorities Doing Less Investigation
The podcast discusses a trend where antitrust investigations by DOJ and European Union have significantly decreased. The speaker highlights how this shift has made investing in dominant companies more attractive due to reduced antitrust scrutiny. Despite media focus on big tech companies under investigation, the actual number of antitrust cases is declining, which presents a favorable background for investment strategies targeting dominant firms.
Blend of Quantitative and Qualitative Analysis in Investments
The podcast delves into the importance of blending quantitative and qualitative analysis in investment processes. By utilizing systematic tools for portfolio construction and qualitative assessments for stock picking, the speaker advocates for a balanced approach. Emphasizing the significance of considering both aspects in decision-making, the discussion highlights leveraging data-driven analysis alongside qualitative insights for effective investment strategies.
In this episode of Excess Returns, we talk Moat investing with Yuri Khodjamirian, CIO of Tema ETFs. We discuss his unique approach to identifying companies with durable competitive advantages and how it differs from traditional Moat investing. We also look at the various types of moats, such as economies of scale, strong network effects, non-replicable physical assets, regulation, and high switching costs, and how these advantages apply to different industries. Yuri also shared insights on Tema's investment process, which blends quantitative and qualitative analysis to construct portfolios of these high-quality companies.
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