Value After Hours S06 E01: Christopher Tsai on $TSLA, growth investing, and his mentor Ron Baron
Jan 15, 2024
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Christopher Tsai, an expert in growth investing, discusses his investment approach, valuing growth companies like Tesla, and the challenges of the early automotive industry. They highlight profitability, competition in the EV market, and Nike's direct-to-consumer strategy.
Nike's transition to a direct-to-consumer model has improved their margins and made them more efficient, giving them a competitive advantage.
Tesla's Full Self-Driving technology and software-driven approach give them a significant lead in the electric vehicle market.
Nike and Adidas have maintained their dominant positions in the athletic footwear and apparel industry through strong brands, innovation, and adaptability.
Deep dives
Transition to Direct-to-Consumer Model: Nike's Shift to Higher Quality Business
Nike has been making a transition to a higher quality business model by focusing more on direct-to-consumer sales. Over 35% of their business is now direct-to-consumer, and this shift has improved their margins and made the company more efficient. Nike's direct-to-consumer strategy allows them to pivot quickly and adapt to market changes, giving them a competitive advantage. The company's strong brand and market position, along with their investment in technology-enabled products, position them well for growth in the future.
Tesla's Technological Lead in the Electric Vehicle Market
Tesla holds a substantial lead in the electric vehicle market, particularly in terms of their Full Self-Driving (FSD) technology. With their massive fleet of vehicles collecting data, Tesla has a significant advantage over competitors in terms of miles driven and data gathered. While other companies have tried to enter the market, Tesla's lead remains unmatched. Their FSD technology and software-driven approach make them an innovative and disruptive force in the industry.
Tesla as a Technology Company and the Future of Electric Vehicles
Although consumers primarily want a method of transportation, Tesla is viewed as a technology company as well. The Tesla ownership experience, with its emphasis on innovative features and ease of use, sets it apart from traditional car manufacturers. While the primary goal is to get from point A to point B, Tesla's focus on technology and user experience creates a loyal customer base. Nevertheless, the electric vehicle market is expanding rapidly, leaving room for other players to enter the space alongside Tesla.
The Historical Significance of Nike and Adidas' Competitiveness
Nike and Adidas have been dominant players in the athletic footwear and apparel industry for decades. Their enduring competition and ongoing innovation have positioned them as key players in the market. While other brands have struggled to gain traction, Nike and Adidas have consistently maintained their market share and even acquired competitors to strengthen their positions. Their strong brands, innovative products, and ability to adapt to market changes have contributed to their success.
Investing in High-Quality Businesses and Diversification of Portfolios
Investing in high-quality businesses such as Nike and focusing on direct-to-consumer models can provide stability and long-term growth potential. Diversification of portfolios across industries, including technology, automotive, and consumer goods, can help mitigate risks and capture opportunities in different sectors. By carefully selecting companies with sustainable competitive advantages and strong growth prospects, investors can build portfolios that outperform broad market indices like the S&P 500.
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
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Tobias Carlisle is the founder of The Acquirer’s Multiple®, and Acquirers Funds®.
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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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