Christopher Tsai on Investing in an Age of Disruption

Apr 4, 2024

In this conversation, Christopher Tsai, President and Chief Investment Officer of Tsai Capital Corporation, shares insights on navigating investments amid disruption. He discusses the evolving landscape of value investing and emphasizes the importance of understanding intrinsic value amidst innovative strategies. Tsai highlights the impact of AI on tech giants and explores its future in healthcare, advocating for collaboration in biotechnology. Lastly, he reflects on the creative parallels between music and investing, reminding listeners of the need for deep research and sentiment analysis.

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INSIGHT

Measure True Unit Economics

Value investors can analyze disruptive growth by digging into unit economics and intrinsic profitability per product or location.
Christopher Tsai studies net income per unit to judge whether high-growth firms justify seemingly expensive valuations.

INSIGHT

Look For Shared Scale Economies

Scale-economy-sharing companies reinvest per-unit gains into lower prices or better products to build durable growth and moats.
Tsai favors businesses that create win-win dynamics with customers rather than pocketing all scale benefits.

ADVICE

Back Proven Capital Allocators

Seek management teams with proven capital allocation and a track record of prudent expansion to limit downside from risky bets.
Favor firms where new ventures cannot imperil the core business if an experiment fails.

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In this episode, co-hosts Elliot Turner and John Mihaljevic welcome special guest Christopher Tsai, President and Chief Investment Officer of Tsai Capital Corporation. The trio covers a range of topics, with particular focus on intelligent investing in an age of disruption.

Christopher delivered a related talk at The Zurich Project 2023, hosted by MOI Global. An edited transcript of the talk is available at https://tsaicapital.com/investing-in-an-age-of-disruption.php

Enjoy the conversation!

The primary purpose of this podcast is to educate and inform. The views, information, or opinions expressed by hosts or guests are their own. Neither this show, nor any of its content should be construed as investment advice or as a recommendation to buy or sell any particular security. Security specific information shared on this podcast should not be relied upon as a basis for your own investment decisions -- be sure to do your own research. The podcast hosts and participants may have a position in the securities mentioned, personally, through sub accounts and/or through separate funds and may change their holdings at any time.

About the Co-Hosts:

Elliot Turner is a co-founder and Managing Partner, CIO at RGA Investment Advisors, LLC. RGA Investment Advisors runs a long-term, low turnover, growth at a reasonable price investment strategy seeking out global opportunities. Elliot focuses on discovering and analyzing long-term, high quality investment opportunities and strategic portfolio management. Prior to joining RGA, Elliot managed portfolios at at AustinWeston Asset Management LLC, Chimera Securities and T3 Capital. Elliot holds the Chartered Financial Analyst (CFA) designation as well as a Juris Doctor from Brooklyn Law School.. He also holds a Bachelor of Arts degree from Emory University where he double majored in Political Science and Philosophy.

John Mihaljevic leads MOI Global and serves as managing editor of The Manual of Ideas. He managed a private partnership, Mihaljevic Partners LP, from 2005-2016. John is a winner of the Value Investors Club’s prize for best investment idea. He is a trained capital allocator, having studied under Yale University Chief Investment Officer David Swensen and served as Research Assistant to Nobel Laureate James Tobin. John holds a BA in Economics, summa cum laude, from Yale and is a CFA charterholder.