Value After Hours S06 E16: Zeke Ashton on value investing in the early 2000s and his return
Apr 22, 2024
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Value investor Zeke Ashton discusses his journey from the early 2000s to his return, covering lessons from the bear market, applying the Kelly formula, and managing funds. He explores the transition to an active ETF, market perspectives, small cap opportunities, and the importance of strong fundamentals in stock ownership. The podcast also delves into the significance of thorough research in value investing and navigating complexities like stock-based compensation and proxy alignment.
Zeke Ashton emphasizes value and growth investing strategies influenced by Lynch and Buffett.
Effective risk management is crucial during market cycles to avoid value traps.
Fractals in nature and business demonstrate interconnected patterns at various scales.
Deep dives
Zeke Ashton's Investing Journey and Background
Zeke Ashton discusses his journey into investing, starting with an internship in the mid-90s that sparked his interest. He highlights influences like Peter Lynch and Warren Buffett, leading him to value and growth investing strategies. Ashton reflects on his diverse experiences, from managing a partnership in Switzerland to writing for the Motley Fool, showcasing his evolution as an investor.
Lessons from Past Market Cycles and Risk Management
Ashton delves into his experiences during market cycles, particularly the bear market of 2002 and the 2008 financial crisis. He emphasizes the importance of risk management and shares insights from his background in risk assessment. Ashton discusses the pitfalls of the Kelly formula and the necessity of managing risk effectively in investment strategies.
Return to Investing and Focus on Valuation and Opportunities
Ashton explains his return to investing after a break, citing personal growth and new opportunities. He explores the market dynamics post-pandemic and identifies potential areas for investment, including small caps and undervalued stocks like PayPal. Ashton emphasizes the importance of patience in avoiding value traps and the need for discernment in selecting investments.
Understanding Fractals: Patterns Across Scales
Fractals are complex patterns that repeat themselves across various scales, appearing self-similar whether zooming in or out. Coined by Bedwa Mandelbrot in 1975, fractals exhibit infinite complexity through repeated processes with feedback loops. Mandelbrot's exploration of fractals, initially noticed in natural phenomena like coastlines and clouds, bridged art and science, showcasing how simple math underlies nature's intricate designs. These patterns are ubiquitous in trees, romanesco broccoli, and even lightning, influencing digital signal processing and antenna design for devices.
Fractal Nature in Business and Capital Allocation
The concept of fractals extends beyond nature into the realm of business and capital management. Drawing parallels to Russian nesting dolls, the interconnection between fund managers, CEOs, and employees showcases fractal patterns at different scales. A private Berkshire holding company discussion highlighted how qualities like intelligence and trustworthiness cascade from capital owners to managers to employees. Capital structure dictates management approaches, with distinct focuses on cash flow, growth, or long-term hold strategies, revealing how fractal elements influence decision-making and incentives in business operations.
Value: After Hours is a podcast about value investing, Fintwit, and all things finance and investment by investors Tobias Carlisle, and Jake Taylor. See our latest episodes at https://acquirersmultiple.com/podcast
We are live every Tuesday at 1.30pm E / 10.30am P.
About Jake
Jake's Twitter: https://twitter.com/farnamjake1
Jake's book: The Rebel Allocator https://amzn.to/2sgip3l
ABOUT THE PODCAST
Hi, I'm Tobias Carlisle. I launched The Acquirers Podcast to discuss the process of finding undervalued stocks, deep value investing, hedge funds, activism, buyouts, and special situations.
We uncover the tactics and strategies for finding good investments, managing risk, dealing with bad luck, and maximizing success.
SEE LATEST EPISODES
https://acquirersmultiple.com/podcast/
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FOLLOW TOBIAS
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Firm: https://acquirersfunds.com/
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ABOUT TOBIAS CARLISLE
Tobias Carlisle is the founder of The Acquirer’s Multiple®, and Acquirers Funds®.
He is best known as the author of the #1 new release in Amazon’s Business and Finance The Acquirer’s Multiple: How the Billionaire Contrarians of Deep Value Beat the Market, the Amazon best-sellers Deep Value: Why Activists Investors and Other Contrarians Battle for Control of Losing Corporations (2014) (https://amzn.to/2VwvAGF), Quantitative Value: A Practitioner’s Guide to Automating Intelligent Investment and Eliminating Behavioral Errors (2012) (https://amzn.to/2SDDxrN), and Concentrated Investing: Strategies of the World’s Greatest Concentrated Value Investors (2016) (https://amzn.to/2SEEjVn). He has extensive experience in investment management, business valuation, public company corporate governance, and corporate law.
Prior to founding the forerunner to Acquirers Funds in 2010, Tobias was an analyst at an activist hedge fund, general counsel of a company listed on the Australian Stock Exchange, and a corporate advisory lawyer. As a lawyer specializing in mergers and acquisitions he has advised on transactions across a variety of industries in the United States, the United Kingdom, China, Australia, Singapore, Bermuda, Papua New Guinea, New Zealand, and Guam.
He is a graduate of the University of Queensland in Australia with degrees in Law (2001) and Business (Management) (1999).
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