Investor Chris Bloomstran discusses Semper Augustus investing philosophy, portfolio-level metrics, and why he thinks stocks are attractively valued today. He shares his lessons from studying high price-to-sales stocks and talks about his daily routine, favorite reading materials, and the value of ValueLine. The podcast also delves into Warren Buffett's investment strategy and Chris Bloomstran's future plans and aspirations.
The Semper Augustus investment approach focuses on long-duration, concentrated equity portfolios and emphasizes management and balance sheet integrity.
Paying a low multiple is crucial for long-term compounded returns, as shown by the correlation between low multiples and higher absolute returns over time.
ValueLine is a valuable tool for investors, providing survey data that helps inform investment decisions and stay updated on a wide range of companies and industries.
Deep dives
Chris Blumshran: An Opportunistic Value Investor
Chris Blumshran, the founder and president of Semper Augustus Investments, joins John Rotanti on the J Ro Show. Blumshran describes his firm's investment approach, which focuses on long-duration, concentrated equity portfolios. He emphasizes the importance of management integrity and balance sheet integrity when evaluating investments. Blumshran shares examples of opportunistic investments, such as buying refiners when the energy component of the S&P was low. He also emphasizes the significance of valuation and discusses how paying a low multiple is crucial for long-term compounded returns. Throughout the interview, he delves into his reading habits, including his reliance on company-specific information, earnings calls, podcasts, and publications like Grant's and ValueLine.
The Role of Valuation and Price in Investing
Blumshran discusses the importance of valuation and price in investing. He highlights the correlation between paying a low multiple and higher absolute returns over time. He shares insights from his analysis of forward returns for high price-to-sales stocks, revealing that avoiding these expensive stocks led to better long-term performance. Blumshran also emphasizes the efficiency of the ValueLine survey in staying updated on a wide range of companies and industries. He discusses how he incorporates the data presented in ValueLine into his investment process and describes it as a valuable tool for generalists.
Investment Philosophy and Reading Habits
Blumshran describes his investment philosophy as opportunistic value investing. He explains that he focuses on businesses with durable advantages, evolving durable advantages, and changing dynamics in industries. He dislikes labels like value or growth and emphasizes the importance of management quality and business quality. Blumshran mentions his reading habits and sources, including The Journal, Bloomberg, Valueline, and various podcasts. He highlights the usefulness of transcripts, which he listens to at an accelerated speed, and how reading earnings calls and industry-specific publications helps him stay up-to-date.
Structure of the Day and Business Interactions
Blumshran shares insights into his daily routine as an investor. He talks about the lack of structure in his day and how he starts with reading news on Bloomberg and The Wall Street Journal. He describes his habit of walking for hours, during which he listens to podcasts, earnings calls, or music. Blumshran mentions the importance of business interactions and the value he finds in conversations with clients, industry professionals, and peers. He also discusses the influence of his personal network on his investment decisions and the exchange of valuable insights across various industries.
The Value of Value Line
Value Line is praised as a valuable resource for investors, with many great investors, including Bill Nygren and Joel Tilling, using it to review companies quarterly. While it may not have a global scope, platforms like Bloomberg offer similar key summary pages and data points. Despite this, the discipline of reviewing companies regularly and analyzing metrics like share count, revenue progression, capital structure, and returns on capital remains crucial for informed investing decisions.
Warren Buffett's Investment Philosophy
Warren Buffett's investing philosophy centers around durable learning power and price consciousness. His investments in companies and acquisitions have been driven by seeking durability and spotting twists that might not be immediately apparent. Buffett's historical investments in companies like Coca-Cola, American Express, and Japanese trading houses were made at favorable valuations, often during periods of market downturns. His ability to recognize inflection points and buy assets with high earnings yields has contributed to his success. As Berkshire Hathaway continues to prioritize smart capital allocation, paying dividends may only occur if opportunities for growth and attractive investments diminish.
