Cheeky Pint - Dan Sundheim of D1 Capital on the art of public market investing

Episode Date: October 22, 2025

Seasoned public and private investor Dan Sundheim sits down with John to discuss the harrowing GameStop short squeeze, waking up at 3am for the European market open, and the emotional asymmetry of managing billions of dollars. They cover why he thinks successful private companies should avoid the public markets, the real genius of Elon Musk's business approach, and the pattern recognition that comes from years of investing. This is a rare, candid look into the strategies and mindset of a top public markets investor.Show notes[Read] The Essays of Warren Buffett: Lessons for Corporate America by Lawrence A. Cunningham[Read] The Buffett Partnership Letters (1957-1970)[Read] Value Investors Club (VIC)Timestamps(00:00) The D1 operating model(07:54) Getting it wrong on NFLX(11:44) What makes a good stock picker(18:16) Portfolio-building(24:35) GameStop(35:57) The art of short-selling(41:48) How to spot a turnaround(47:12) Waking up at 3 AM(53:14) Money management(59:31) Dan’s 10-year hands-off stock pick(01:09:52) China(01:14:44) Are we in a bubble?(01:20:41) SpaceX(01:25:04) Investing in private companies(01:32:55) Thoughts on the banking industry(01:35:58) Advice for budding investors

I don't think I've ever had a Guinness. Unlike Scott Wu, I've had many, many, many years, perhaps thousands. But I'm not sure I've ever had to get this. For that and a long clock, I will wake up almost exactly. Between 255 and 3, almost every day. Wow. So you wake up ahead of earnings. No, no, forget earnings.

Like, every day. I just want to see what happens at the open. No, I don't want to wake up. I actually don't want to wake up. I mean, if I ran a private company like Stripe, I wouldn't go public. I think the public markets It's kind of ironic because you're a public markets investment.

Yeah, I think the public markets are kind of problematic at this point. Dan Sondheim is one of the world's top hedge fund managers. He runs D1 Capital, which invests in public and private companies across a bunch of totally different industries. Dan's one of the smartest investors I know. So Daniel Gross and I tried to get into his head

and figure out how he analyzes companies. Cheers. Cheers. You actually use, like if you are trading underneath the table during the interview, like are you in interactive brokers, Are you WhatsApping someone who executes this? I'm just emailing.

I'm emailing the trader with that, yeah. I mean, I'm checking Bloomberg all day long. That's the app in my phone. My phone. But I'm just, I'm just emailing, texting my traders. And if the trader's like sleeping or something, is there an app that you use? If you're sleeping during the day, then we haven't encountered that problem. That'd be a different problem.

But if you're sleeping at night, we actually have overnight traders in Asia. So once you told me sometimes when you struggle to sleep at night, there's nothing better to do than wake up and start trading Asia. So is that your East Coast trader or do you have another person? Yeah, we have another person who sits in, we outsource. I see. Yeah, I see. Yeah, yeah, yeah. And then how, what fraction of AUM is just dance on time trades?

Or down sometime decisions? 95% plus. Oh, so all of them. Yeah. Okay. Yeah, yeah. I mean, people have trading authority. Yeah, yeah.

But most of the trades I put it myself. Memos come up to you, and then you ultimately size them and decide whether to do the Monash or something like that. Yeah, I mean, the process starts way before the memo. I'm in dialogue with the team about the idea, why they like it. We're having conversations way before it gets to the memo stage. But how it gets to the memo state, and usually we start buying it before, because in the public markets, you know, If you have a good idea, you could take a month and a half to write a memo, but by that time, the price may have moved. So usually we start buying it before the memo is done, and then the memo is kind of the final, you know, compilation of the due diligence.

And that's when the best thing that could happen is we're buying it and then the stock keeps going down. So by the time you have the memo and have even the most conviction, you can buy more. A lot of the times it's going the wrong way. But what fraction of the time, like, do you finish writing the memo? And you're like, oh, no, this is terrible company. This is not good. Yeah, yeah. No, like, that doesn't happen because usually they'll start writing the memo,

and then they'll come to me and be like, I think I made a mistake, and we'll sell it. Like, rarely have I, I only have ever owned a position because we had discussed it, then read the memo and been like, oh, my God, what are we doing here? Yes. That would be a bad sign for the analysts. We jumped right off the deep end. Describe what D1 does, AUM.

strategy for the uninitiated. Yeah. So we invest in public and private companies. We do fundamental analysis. And so deep research, trying to understand business models, trying to understand company prospects, choosing the right management team.

And whether it's public or private, we're investing with the horizon of three to five years. And we applied the same due diligence process to both public and private. Obviously, private is a one door and public is a two-way door. So, you know, that's different. Is private actually a one-way

door even as just the private markets have matured and there's so much more secondary activity and things like that? Do you still have to treat it as a one-way door? Definitely. I mean, you can sell like the best companies you can sell easily, but those aren't the companies you want to sell. So, you know, it's, we rarely transact in the secondary market because, you know, we don't want to sell the best companies. And it's hard. People think you can just transact in the secondary market, but if you're,

you're going to sell $50 million, $100 million, people have to get information rights from the company, and then it's like... And it's viewed as a signal if you're like... Exactly. If I go to the management team and say, I want to sell and the person doesn't follow through, it's not great.

Yeah, yeah. So the AUM is about $25 billion, about two-thirds private, $10 million, public. Public is long, long, short. and, you know, all bottom up, no quant, really kind of the same thing people were doing in terms of stock picking 30 years ago. And we say no quant, that is, you're contrasting to some of the more short-term kind of technical

firms that are just trading based on what will happen the next day, the next week, the next month. Exactly. And we're not using any computer programs to guide our trading. We're not, you know, we are not trading based on quarters. were, you know, you could be doing my job the same way 20 years ago. You wouldn't have exactly the same tools, but it's just, you know. Do you think of any of those signals that people talk about when you think of one to enter or exit a trade? Like the stock would be oversold or overbought?

No. Okay. What I find interesting about you guys is you're long term in that you're not like you're saying some of the quant guys who are just trying to predict what happens, you know, in the next, you know, what's the next buyer doing or the high frequency guys or something? something like that, you're instead just thinking, like, is this company selling good product? Will their sales exceed, you know, what people expect? And will that add up to a good business? And so, like, the work is evaluating future earnings of the company. But there are some people who are really buy and whole. Like Costco seems to attract a lot of shareholders who think there is no price that is too

expensive for Costco. And there's kind of a huge loyalty there. Whereas you kind of have a price on both ends where, you know, at this price, I'm an enthusiastic And at this price, God bless him. You know, I'm selling the entire position. And you kind of have that price boundary at both ends. Yeah. I mean, so practically, we may say we think that in three years this company is going to be worth double, right?

So kind of roughly 20-something percent IRA. But if we're right about the company, usually it doesn't go 24 percent, 24 percent, people pull forward the IRA. The stock may go up 50 percent in the first year if things go well. then the forward IR all of a sudden looks a lot, you know, worse, and you're kind of moving capital to the next opportunity. I think the biggest mistakes, if we would look back, I mean, it's easy to think about the mistakes where you lost money,

and you think about those a lot, but the biggest mistakes are selling the cost goes too early because, you know, the IRA is totally dependent upon what you assume the exit multiple is. And that is difficult to be precise about, you know, what the right exit. is for business. So let's talk about painful mistakes.

Like, can we talk about Netflix or something like that? Yeah. So Netflix, when we started the firm, almost every LP I met with, you know, the only 20-year stock pitch. So I pitched them Netflix. And actually when we were interviewing candidates, what we did was we gave every single intervie the same case study. We said, this is in 2018.

So we said, look at Netflix, look at Spotify. If you had to buy one of these businesses and hold them for five years, which one would it be and why? So it was like Netflix all the time because I was talking about Netflix with LPs. I was talking about it with interview candidates. And ultimately, the thesis was correct. And I didn't hold it long enough. And so in 2018, the reason Netflix was contrarian was obviously a great product that people loved, but they were burning a lot of money. And so it was just not clear was this like a classic tech company where would they ever make money?

That's why it might have been controlling without peace. Yeah, I think the issue is, like, there's very few tech companies that are massively capital-intensive, right? Almost every tech company loses money for a period of time. But the typical software company you're looking at, like, you know, there's operating losses, you leverage it, and then people are very used to that business model. Up until the LLMs are very few tech companies where it's, like, a huge fixed investment, and then the incremental margins on the sales are extremely high. And so what that meant was that Netflix was investing heavily in content, which is a fixed cost.

And then they were selling that to consumers. The next year, they were investing more in content and selling it to more consumers. But you're constantly investing more and more in content. And the skeptics thought this would have to keep going up forever and they'd never make money. Yeah, because the cash flow just looks worse and worse every year because you're investing more and more. But ultimately, that created a moat that was... I think the defining, you know, aspect of the business model that made Netflix what it is today, meaning that it's like a flywheel.

You invest a ton before anyone else. Actually, what happened here is the media companies enabled Netflix by selling them content. And then Netflix invested a ton, sold to people globally, took that money, invested more in content, actually borrowed in the high-yield market, invested more in content, sold to more people, and then the fly-wheel then, you know, within five years, they're investing way more in content than anyone else. They're selling it to way more consumers. The incremental cost of selling that content is very, very low. And so you have this fixed asset that you've built up that...

And what kind of ultimately caused you to sell it? We had transitions on our team. And, look, we cover every sector, right? So there's like... We're covering at any given time 300 stocks. And we had transitions on our team, and our media analysts left. And I was focused on other things. It was not excusable because if I look back, we get plenty of things wrong.

But Netflix, we got exactly right. There's a sense of, do you ever have this issue where people want to pitch in new things because they're like new and exciting? And I guess like the good old Occam's Razor idea is just hold what you have. And I have to push back against them. Yeah, I probably should push back more. I mean, like, you know, I think it's like a human tendency to like, oh, this is a new company. I love investing. Let's learn about this new company and this sounds super exciting.

But at the end of the day, you know, there's like only so many amazing companies. Yeah. And trying to, you know, sell them and move into something else is almost always a bad decision. That's a nice thing about the private markets is that once you invest, you can't sell. And usually for the best companies, that's a huge benefit, ultimately. Yeah. I just want to go back to the starting D1 for a second. And so the lore is that prior to D1, you were at a firm called Viking.

Is that right? Yep. And the lore is that almost all of Viking returns increasingly came from Dan Suntime offhandedly making a comment to someone at the water cooler that, oh, that could be a good stock or definitely don't invest in that. And people would be like taking those trades of their own for the most part. Those are your words, not mine. Yeah. I've never said that. That's the lore.

And I guess my question is, when someone comes up to you, an analyst on your team today and says, oh, hey, what do you think of XYZ? And you do that sort of Dan Suntime, 30-second, 10-second take. What is going through your head exactly that gives you just this binary sense of like, looks good, not good? Well, look, I mean, every situation is different. I think the biggest risk is sometimes people will come to use an idea. and they come in the idea and they pitch it for a little bit, and I think about it, and I give them an answer.

And I don't have enough information to give them a really solid answer, but whatever I say they think is like, okay, well, if he said that's not good, then I'm just going to forget about it. And that's actually not, you know, that's not constructive. Like, I am wrong all the time, even when I've done a ton of work. And if it's just like a 30-second pitch to water cooler, I can say, like, that sounds interesting.

Or I can say that doesn't sound interesting. Yeah. But I'd say my hit rate there is dramatically lower than one. once we've done all the work. And there is a risk that analysts are like, they try to take my temperature, and if I'm going to be, if it's going to be something that interests me,

and if it's not interested me, don't waste time on it. That's actually not great. But I think what Daniel is getting at is like, you seem to have an intuitive sense for companies and in this underwriting. Like, it's not just all about does the model, you know, spit out in 19% or a 21% IRA.

And what is that that the spidey sense is picking up on? I mean, I think it's like anything else in life. It's like pattern recognition, right? It's like part of it is just understanding business models, understanding, you know, what kind of valuations companies should be trading at. Part of it is just having invested in this capacity for 20-something years, you know, you get a sense. Like if somebody comes to you and pitches like an idea to allocate a ton of R&D resources

to some engineering project, you probably have a pretty, good sense, like, up front, whether or not, like, they should go write a big memo, proposing that or not. When you interview young... It's an art, not a science. Right. So when you interview younger, say, portfolio managers, or when you meet, do you have a sense fairly quickly if they have, whatever this is? Like, do you think this is a thing just people have or they don't? I think the answer is yes. So a couple things. One, we don't hire portfolio managers. Right. I pretty much only hire people who've never done public equity.

before, which has pros and problems. What had they done before? Piano teacher. We typically hire from private equity. We typically hire from private equity. And because then they have the analytical skills, they understand accounting, they understand financial modeling,

and then we can teach them the stock picking. And if I hire somebody laterally, who's a portfolio manager of another fund, that's rarely been successful. Almost never. Because of some negative transfer, like the of expectations. Everybody has a different, like every firm has a different approach to investing. And getting people to change their habits to align more with how we invest is incredibly difficult.

Now, like, if I hire somebody from private equity, it takes about three years for them to really be, like, contributing to D1. So obviously, it would be much faster for me to just hire an external and there's funds to be successful. So, like, they come in, you say it's three years. What's happening? You know, they're say they're three months in, and they're trying to speak up in a meeting, and you must be thinking to yourself, this isn't really the D1 way.

Like, what is that exactly the changes in them over the course of the three years? Yeah, look, I would tell you that I wish that it is incredibly difficult to figure out who is going to be great. And even after, like, after three years, I'd say our hit rate still is not as high as you would expect. Like, I imagine if you hire an engineer after three years, you'd probably have a pretty good sense if that guy's a good engineer.

Our girl's a good engineer. I think that we, I have a pretty good sense, but it takes even five years to really get a sense because some people start out where they're analytically really solid. And they work incredibly hard. But the actual intuition of like stop picking hasn't come to that yet. Is it because you're saying like the job is so pattern recognition oriented that you just need some time to build up the pattern recognition?

And like is that what they're learning? Some people like once in a while people come in and like, you know, ran at the gate, you're like, wow, this person like sees it. You know, they see the ball really clearly. But that is very small fraction of time. Most people get great over time, and they have to learn an industry. So when they come in, we will say, you know, you're going to cover FinTech. And it just takes them a year just to understand FinTech, right?

Then they have to see, you know, well, why is XYZ stock trading at this multiple, and why is this stock trading at this multiple? What's the market saying? And, you know, I think it's like the market is constantly giving you data points. Some of them are, you know, false signals, and some of them are good signals. and over the long term, they're all good signals. And the people who do great this job, you have to have, like, some commercial sense,

which I think is, like, probably just, you're either born with it or not. Charlie Ungar is money-making gene. Yeah, I wish I could, like, test for that. It's impossible. But you also have to love the job. Like, you have to wake up in the morning in the shower, be thinking about, like, your stocks.

You have to, like, this isn't the kind of job where you're, like, you close your laptop, you go home, and, like, you forget about it. It's kind of, you have to always be on. And there's people who love it. And if you love it and you have that commercial instinct, that's, you know, and you have to be analytically sharp. Do you have a leaderboard of individual people's, like, portfolios and how they're doing compared to each other?

Yes. Yeah. Everyone has like a what we call a mock portfolio. So every week, they have to take the positions they cover. They have to say, if I was managing capital, here's how I would allocate capital among the names I. And then what happens at the end of the year is that sometimes it's like I own these five stocks. My mock portfolio was up, and we take it very seriously. The mock portfolios actually goes into people's comp.

Sometimes it's like that person did phenomenally well in their ideas, and I didn't monetize them. And then sometimes it's the opposite. But like it takes care of a lot of the typical hedge fund thing of like at the end of the year, like, oh, everyone like, remembers the things that they want to do that worked out and forgets what, you know. So people have to pre-register what they're going to come to you at the end of the year and say, see, I was right. Yeah, exactly. So I know, like, did I...

Do you have a situation with the mock portfolio where someone goes short, something you're long, or vice versa? Well, that hasn't happened yet. No, that hasn't happened yet. But like, there are big discrepancies between, like, sometimes I don't also be like, I think this is a 5% position. And they're like, I think you're crazy. I think this should be double that, yeah. Do you have a mock portfolio yourself or is D1 your mock portfolio? No, D1's my mock portfolio.

That wouldn't be very useful yet. D1 is my mock portfolio. Yes. And then, okay, you talked about sizing positions. Everyone's coming to you with all these good ideas, because, you know, they're not bringing, they're bad ideas. And they're like totally idiosyncratic. Like some are super safe bet.

Some are like kind of flyers. Some are industrials and tech and banks and everything. How do you size positions and how do you just assemble that into a sensible portfolio? Yeah, that is really difficult to answer because it is, you know, it is entirely an art that we're always trying to get better at. And we look at tons of data just to, you know, see what we could do better. But it is really just to feel like, look, for every stock, there is a target price. But then there's also what kind of risk. There's a risk for reward calculation.

Like, okay, like maybe you can make 50%. but you also could lose 50% if you're wrong, sometimes you can make 25%, but the risk of losing money is quite low over time. And it's a matter of like you have to compare those two ideas, which are inherently very, very different. And construct the portfolio, which has, you don't want all names where you could make 100%,

but lose 40, but you probably don't want to have a portfolio full of names where you'll make 20% and lose 3. So it's a lot of things that go into it. There's like the risk for war, there's like the ultimate upside. There's a sense of like what's currently happening in the business. Like, you know, if a business we think has currently has a lot of momentum, I'm not predicting quarters, but if the business currently has a lot of momentum, the chance of you losing money in the short term, assuming it's at a reasonable valuation is much lower than if a business,

we're often buying businesses when they're going through really tough periods, right? You have to be very careful because, you know, often that's the best buy-in. opportunity, but that's the riskiest time, too, because sometimes it's hard to call the bottom. When you say you have to be really careful, isn't there a principal agent issue here where when you analyze a company, you try to predict what its earnings will be three years hence and be more right than everyone else's, you know, maybe they're too pessimistic on the company and you think it'll actually really over and compare it to people's expectations? But you're actually really really sensitive to what people think in the short term because your LPs are grading you

on the performance in the year and the performance in the quarter. And you're judging this poor analyst, you know, in their job on the mock portfolio, which you're saying is like updated weekly. And so aren't you not actually looking at companies on a three-year time horizon because they have to like perfectly perform it every step along the way and they can't be misunderstood for any short period? Yeah. The way I think about it is any given time, we are planting seeds and then we're harvesting.

Like, there's some companies that we invested in a year ago, and our thesis is starting to play out, and you're making money hopefully on that idea, and, you know, maybe you're selling that idea at that point. And then you're putting in new ideas in the portfolio that might take another year to play out. And so it's not like if we started out with a bunch of ideas that all had three or targets all at once. Like, yes. But, like, the portfolio is a living thing that, like, you have a range of position some you've had for a year or two, and you think the, you know, the business is going to turn the stocks into work, you know. And then there's other companies that you're buying now because they're really depressed and really out of favor.

And you know they're not going to go up in the next, you don't think they're going to go up in the next three or six months, but over any medium term time, right, they will. So it's like always... So you have limited capacity in your portfolio for the out-of-favor stuff where, like, ultimately you're smoothing this for LPs, where you always need some companies that are performing and are popular. No, because, like, you know, I may have bought a company a year ago that was out of favor. And maybe it's still out of favor, but eventually, like, you know, the way economic cycles or industry cycles work, the company I bought a year ago, maybe I didn't make money on it for the first nine months. And now it's starting to inflect.

And I'm putting a new company in the portfolio, which is out of favor. And that will start to work, it's impossible to predict that will start to work six, you know, six, 12, 18 months. in the future. But if you have a portfolio of things that you've built over time, our monthly returns and quarter returns are purely an output. Like, there's nothing, it's, it is arbitrary in some respects. I think, you know, Jeff Bezos once said, like, when people congratulate him on the quarter, he said, like, yeah, but that quarter, that quarter was cemented, like, three years ago when I made this decision to do XYZ. It's kind of the same thing with us. When the stock's working, we probably were investing in that stock a year, 18 months ago, and, and, and

And then, you know, now we're investing in a new stock, which hopefully will pay off in 18 months. So one thing you're kind of famous for is pain tolerance. You know, you go through phases of euphoria in markets. You go through phases of pain in markets. And I was just wondering if you would, like, walk us through maybe across D-1's history, like the most painful phase. And just how you, yeah, how was that for you? It's a very oblique way of asking about game stuff. Yeah, yeah, yeah, yeah.

I do have a high pain tolerance, but so the first three years of our fund, our fund did phenomenally well, way better than I would have expected. There's always some newer version you expect that like, okay, like, you know, the next 12 months are going to be harder because you've just made so much money. As we were entering 2021, we had an amazing run. Every my firm was like, you know, elated, like they had, you know, everyone had done well. They were part of a winning team. And, you know, for me, I was, I'm always, like, a little nervous in the back of my head when things are going too well. What I didn't expect was that the mean reversion would happen within three weeks and would, you know, like, be so dramatic that, like, it, you know, we never came close to going to business. Never had margin calls.

But it was an absolutely insane. But so what happened? What three weeks was last? Okay. So 2020 ends. Everything is great. we're up, I don't know, I don't remember how much we were up, but we lost. Very, very high.

And, you know, back then, we are fairly aggressive short sellers. Like, you know, we, I like shorting stocks. It's masochistic. I love doing it. And I always like shorting stocks. And this is a time when, you know, we go back to like 2021, think in your head. The government was mailing everybody checks. Everybody was sitting at home.

They weren't going to the office. You know, Reddit was starting to become a big thing. And all those things came together to create a massive short squeeze on the order that I've never seen before. The way I've always thought about stocks is like, let's say a shorter stock. I think it's going to earn X. I know that if I'm wrong, it's going to go up this much and probably goes up more than it should fundamentally because people are short and they're going to have to cover. That's my whole career. I've never had in my risk-reward framework.

nothing happens fundamentally and a stock goes up 400% in two weeks. That's what happened. And if you think about what shorting is, shorting is leverage, right? It's just borrowing shares you have to pay back. Imagine borrowing a lot of money

and the amount that you have to pay back goes up by 100% every week. That's very stressful. It's like the developing market debt trap kind of. Yeah, that was quite stressful. And then imagine that also, at the same time, you know, the American populace is basically all, like, coming together to think that, like, these are the people you should attack these short towers. And so it was like CNBC was like, it felt like everybody was behind this master short squeeze and felt like it was a great thing because these headshot managers were paying, you know, for what. That was the surprising thing, right?

because it's the age-old inner crisis, all the correlations go to one, and things that are supposedly in your model uncorrelated actually turn out not to be, you know, this is the long-term capital management issue, it's like, oh, crap everything's correlated. And similarly here, wasn't it that like any one stock spiking 400% would have been fine?

Yeah. But it was the fact that this new retail phenomenon of all of the highly shorted stocks by hedge funds melting up together was maybe the thing that... Exactly. People say GameStop, but GameStop is just like, that's a name that people use because it was the most prominent name. But what was the experience like? So it's in week one, it's up 100%. The week was like, the experience was like, I was almost like in shock.

We were losing an amount of money that was almost hard to like even fathom that you could lose that much money in short period of time. And imagine like we were going from being like on top of the world to within three weeks. we were, like, people were saying, like, oh, these funds are going to go out of business. And I am generally pretty even keeled when it comes to markets. I've been doing this a long time. I've, you know, seen a lot of things. That was, you know, the toughest period I've ever had. And it was, it was really stressful to the point of, like, you know, I was almost like, you know, I felt like I was an emotional shock.

Now, I was still laser focused. And I knew, you know, I'm like, I'm on top of it. You know, I'm acting completely rationally. But it was like very, very, very hard. And I had friends who were getting bailed out by other funds. And, you know, you felt like the whole world was against you because, you know, there's other people. It kind of was. Yeah, it kind of was.

Like, it's like, it was really hard. What I'd say about this job is that there's, like, an asymmetry of emotion, right? Like, when you're making a lot of money, it's not like I'm like tap dancing around my house, like euphoric. Like, my lifestyle doesn't change. I feel like, yes, I'm happy that we're succeeding. But, you know, it's, I'm happy, but I'm not euphoric. When you go through something like that, I mean, it is like so painful and stressful. And it's not because I'm losing my own money.

It's more about losing other people's money. you know, it's more about, like, you know, you know that what's happening is completely economically irrational and how long can you actually stick with it? Yeah, is that the painful thing that, like, if you're covering the shores, you know that you're covering it at about time because this is not a long-term sustainable price level.

Yeah, like, so we covered everything at the worst time, and I knew it was the worst time. But if it kept going on for two weeks, Yeah, all of a sudden there's a real problem. I wasn't going to put the firm at risk. And I told my investor said, this is the worst time. Now, if I had held that short portfolio, forget, like, from the top. If I had just held from the end of 2020, I mean, they underperformed massively.

Like, you know, it would have been like... You were right on the shorts. I was right on the shorts. But, like, I was wrong on their risk management. So, again, there's this new phenomenon of retail meltups in stocks. And in particular, certain stocks, seem to attract the retail crowd, and the price movement of the company stock just seems to...

Like I was just looking out, there's a lot of retail interest in Open Door. And so the price movement just kind of takes off and starts doing its own thing that's kind of different to what's been happening, how it's been valued previously. How does this new retail phenomenon change the short-selling game for you?

I would say that the opportunity for short-selling is better than it's ever been... in my career. However, like, however, however, you cannot capitalize on that opportunity. Like, we went back to 2019, and the same thing was happening. I would, you know, be massively short these companies. But after going through GameStop, there's a ton of opportunity, but you have to be much smaller in each individual name

so that, you know, you don't subject yourself to, you know, what happened in January of 2021. But is this a new kind of science just like understanding what the crowd is going to do? Or is that just like, there's no science behind that. It's like- You could have like the Reddit channel analytics and like following the tweets.

You could like, yeah, you could follow like, you could follow Reddit tweets all day long, but like, I mean like, where does that tell me? Like, okay, the stock went up 100%. There's a bunch of people who like the stock. Obviously, if I read the Reddit, like, duh, they like the stock went up 100%. like, I think it doesn't, there's no information signal there.

I know that people are buying the stock. I know that they're buying the stock for a reason that I think is kind of silly. And, you know, the most important to me is that, like, we just have to be able to write it out. So, like, whatever happens, risk management cannot happen after the fact. Like, anything you do after the fact is not risk management. It's actually just destroying capital. Yes, yes. Risk management has to happen before the fact, meaning, like, you saw.

size these positions so that like when it goes up, you don't have to cover. Anyone who says like, oh, I like risk manage the portfolio because like things were going against me, like almost, if you're a bad stockmaker, sure. Yeah, it's like I cut by losses. If you're any good at stock baking, like risk management after the fact is a bad idea. Yeah. So we now size things such that like, look, I'm not trying to figure out like what's happening on Reddit or this or that. You know, people like, you know, it's like it's like people get excited.

about one stock is in fashion one day, then next week they move on to another one. I can't predict that. All I can do is size of positions such that if they get excited and the stock goes crazy, we don't have to cover. We just kind of let it go and ride it through. So is it something like previously you could have had

a more concentrated short portfolio where you could have had a few shorts that you really like? Now, and you would have said, oh, it can go crazy and it can 2X if it wants, and I'm still fine, whereas now you need to have many more individual short. short positions where any of them can 10x or 20x, and you're still able to write it out? Correct.

10x or 20x is a little extreme. We don't have that very often. But this kind of stuff happens. It does happen. Like, yeah, we don't charge like $1 stocks. But yes, that's exactly right. After GameStop, we took about a year off of short selling. And then I reengaged in short selling.

It's like someone going through a tough breakup and saying, like, I'm not dating right now. Yeah, it was like, okay, we're going to like step back. Like, I didn't know there was a 500 mile or hurricane existed. I didn't know that could happen. It happened. Okay, so now we have to, like, figure out what kind of windows are going to put in our house, right? So we took about a year off from Shorting,

which hurt us a lot in 2022. When we got back into it, I said, look, we're going to have to be more diverse. We're going to, you know, have to be less aggressive. And, you know, my view going in is, like, logically, you should expect that your returns will be worse. And then the question is, like, okay, so shorting is, you know, is a really hard thing to do.

So at some point, it's like, okay, if you're going to diversify so much and your returns are your ground, like, isn't even worth it. And if you ask me at the time, my LP has asked me, I'd say, like, I don't know. Like, I like shorting stocks. I think we can do it. But this new strategy, not quite sure if the juice is worth the squeeze. As it turns out, if you look at our short alpha since that time and since we implemented the more diverse portfolio you referenced, our short alpha has been as good or better. And I think the reason is, is because. Or as the prior short alpha, when we were more concentrated.

I think the reason is that you can't be as big, but there's so many more misprice stocks that, like, you can have 40 of them instead of having eight of them. Yes. And so... What makes a good short? Good question. Yeah, like, I mean, there's a lot of different kinds of shorts.

So the ones we've been talking about are, like, stocks where usually what, what, what, gets the retail crowd excited on social media. Usually it's stocks that have some story, which is novel and exciting. Maybe it's a new technology. The revenue growth is really good. And you're kind of analyzing the business model and saying, like, this technology just doesn't work

or like this company is actually, you know, the founder's horrible. That's its own thing. And then you have shorts where, shorts that we think have like real terminal value risk, where we look at the company and say, like, I actually don't think this company will be around in 15 years. And that's usually because of what's something secular is happening in the economy.

But there's like Kodak type stuff where like the business will go away as opposed to Pyranos type stuff, usually where it's like pure fraud. Exactly. Theranos would be like its own thing. So there's like frauds, which I used to do a lot. more when I was younger. It's hard to find frauds at $10 billion companies. It happens, but you know, we're not training. Capital markets are pretty good for eliminating frauds from the Yeah, like, you'll find them, but they're usually in companies like that are $1 billion market

apps or $2 billion market apps, which is kind of below the threshold where we play. Because you can't get enough exposure. Yeah. I mean, like a fraud rarely gets to be like Enron size. So you have the retail stocks, which are just like story stocks that have, you know, there's really no real substance to the company. Then you have terminate value stocks, like Kodak would be a good example, where you just look and say, like, here is where I see the economy going because of some secular trend or, you know, some technological innovation or, and this company's business model is going to be severely compromised over the next decade.

Then you have stocks where you just think that the business from a competitive standpoint is just really disadvantage and it's going to seed market share for a very long period of time. And then I say the last and least attractive shorts are the ones where it's like cyclically they're just over-earning a lot and you believe that the real earnings if you were to look like through a cycle are much lower than people think. And how do you think about so there's a company, maybe they're in a bad place in the economy, it just doesn't seem like it'll work out, but there's always this fear, you know, that they could bought out, whether there's a sudden management change.

And I guess do you just size your books such that that's okay for you? Or do you use options? I find that like generally, companies that have secularists almost never get bought. Like I rarely has, do I ever see a CEO say, I want to go buy something that grow slower than I do? Right. Like this doesn't happen. Right. Nobody wants to take the time to do an acquisition that's going to invite a bunch of secular risk into their business. Maybe Ron Perlman did that back in the day.

But that doesn't happen. What can happen is if you have a company, like the example I gave where there's a company in the industry that you just believe it's going to seed market share for a long period of time. Because of their positioning or management or strategy. and then what can happen is like an activist comes in, takes a big stake in the company and says, like, we're going to replace the managing team. And once we do that, the new management team will pursue a different strategy and, you know, they will no longer lose market share.

That is a big risk in that category. That's kind of the only category where like... And you don't use... And to manage that risk, you just manage your book. Do you use derivatives at all? I don't use derivatives at all. The problem with derivatives is like, look, at the end of the day, when you break down what is a derivative?

It's just leverage and implied volatility. Like if I want leverage, I can go, you know, get leverage from a prime broker. I don't have any view on implied volatility. And the problem with derivatives is there's typically a timeframe. I'm not good at timeframes. I don't know when a stock is going to work or that's very difficult. So I don't like having something that, making a bet that something's going to happen in a certain period of time. I just, so we keep it pretty simple and just trade underlying stocks.

So I think that, like, nobody buys businesses that grow slower than them, or rarely. People usually don't buy companies that are market share donors. Like, what CEO is, like, I really want to, like, buy this. It's like, that's like a headache, right? So there's a stage of the life cycle where companies kind of become unacquirable, kind of? those companies, like, I don't worry about them being acquired. What are you worry about, as I said, activist comes in and replaces management.

Usually the new management team can't fix it, but sometimes they can. And that's a risk. You know, in terms of, like, the companies where I said, like, they have no terminal value. The risk is just that they usually trade at low multiples, right? And so you're basically just DCFing the cash flows. And if the cash slows, if the cash flows,

if something happens, and people receive the cash flow is going to, like, last a little bit longer. Yeah, because the starting valuation is low, they can go up. Cyclical shorts are just entirely different. The risk is just that, like, you're early. Or you're just wrong about the cycle. Like, there's something about the cycle, which is different this time.

But those are kind of the main categories of shorts. Speaking of cyclicals, why has Rolls done so well? Like, they're up 5x, 10X over the last few years? The Rolls Royce, the jet engine and turbine manufacturer. Yeah, yeah. Main business is aircraft engines for wide-body jets. They're not big in, you know, AI IGTs? Not as far as I know. You know, they have an SMR business.

Okay. So, you know, that could eventually help. Roles is not very cyclical. The reason why... Are its engine makers historically cyclical? Not as much as you would think, because most of the business is I sell you an engine. Oh. I sell you an engine for not much money, but I make a lot of money in aftermarket,

which is much more predictable. So the air framers are cyclical, but the engine makers aren't? Air framers are cyclical, but pretty good secular growth, and is a duopoly. Rolls-Royce was just horribly managed for a long time. Like, it actually had, making jet engines is incredibly difficult. It sounds hard. A new jet engine. It looks hard.

You literally run rough. A new jet engine. I kind of idea you think might be hard. It probably takes like five to ten years to do the R&D to develop a new jet engine. So Rolls-Roy's actually had. good technology, it was just very, very poorly managed. And they signed a bunch of contracts with airlines that were very unfavorable. And they had a new CEO come in, and he operationally turned the business around in a pretty

fantastic way. You guys were long wills, right? So that's a good example of like how do you, because every management team says... Yeah, every management team says, we're going to turn this thing around. And every management team has a projection that, like, looks good. And so how did you determine that now finally they're going to turn it around? Okay, so let me start by saying, like, the U.S. and Europe are very different in this respect. I find that, let's think a U.S. company that had, like, a turnaround, the industrial company, like 3M.

3M had been a horrible stock for a very long time. It wasn't well managed. new CEO comes in, puts up one or two good quarters. Everybody, we owned it, everybody basically understands what's happening, and the stock kind of goes to fair value with the assumption that the margins are going to go to where they should go. The U.S. is pretty quick at seeing change happening and then pricing in that change. In Europe, I find, you know, once a company like a company like roles had underperforming, for so long. I guess that European mutual funds

they just kind of got in their head that like, Rolls is something we just don't want to touch. So the voting machine is lagier in Europe. Lagier. Why is the information connectivity higher than in the U.S.? Like, what's going on? I think it's

hard to me to say, but I've seen it over and over again in Europe. Like, it's almost like when rolls is being turned around, it was pretty clear after the first year that what he was doing was going to work. And it wasn't really that difficult to... Based on earnings, based on deliveries, based on talk to customers.

Based on, you know, meet with the Imagine team. They say, like, here's our plan, here's what we're going to do. You know, you see things playing out. You see the income saving progressing, like, as the person said, you know, you get a sense for, like, Too fond of the C is the name of the CEO. You get a sense for like, okay, is this person good? The same way you would assess it in the founder. Is the right framework that it's the U.S. and rest of world,

or is Europe kind of uniquely bad at this compared to Latin America? I don't do enough in Latin America to have a strong view. But like a Japanese turnaround. I think Japanese turnaround be closer to Europe than the U.S. But I've done a lot more turnarounds in Europe. If Rolls-Royce was trading the U.S., I'm fairly confident that after the first few quarters and people meeting the CEO, it was very clear to me that the CEO was excellent. And why is that functionally? Like, do hedge fund managers, or like most of them presumably are in the U.S., and they mostly like to buy American stocks?

I think the American markets are just much more efficient. There's just a lot more capital. But there are no hedge funds that have very few hedge funds, presumably, only invest in the U.S., I think you'd be surprised. I mean, I think Europe is generally viewed appropriately so as an extremely low GDP on exciting place to the peak growth. So there's an issue where like presenting that to your LPs is kind of embarrassing. Is that part of the problem?

Like, oh, we took a position in a European company. I'm not sure we would want to do that. No, no, no, no. Obviously you don't, but I'm just trying to understand why the average hedge fund manager doesn't just back up into roles. But isn't just a home country bias? Like, people invest in what they know? Yeah, I mean, I think it's, let's see.

I think it's, look, it's much easier from the U.S. to invest in U.S. companies. Like, you understand the accounting. It's, you know, it's U.S. gap. You don't have to stay up all night in the middle of the night to follow the stocks in the airport earnings. Like, you're assuming like hedge funds. If you have a big position in another time zone, stay up to watch earnings? Do you wake up to watch me?

I actually have, like, without an alarm clock, I will wake up almost exactly between 255 and 3, almost every day. Wow. Wait, let's, let's, yeah, there's so much drawn back to it. So you wake up ahead of earnings. No, no, forget earnings. Like, every day. Oh, okay.

Like, every day, like, just because I've been doing it for, who know, 20 years, like, the European market opens, depending on daily, the same time. It opens at 3 a.m. Okay. I just want to see what happens at the open. No, I don't want to wake up. I actually don't want to wake up. Yeah, but you're there.

But it's just like, you know, all habits, die hard. So you wake up, check you have finance, and go back to sleep? Yeah, like, sometimes I'll send out, like, you know, a bunch of texts. Thoughts. People who have no interest in getting a text at 3. Yeah, yeah. And, you know, I'll, like, think of things. You seem to have, like, a special setting on their iPhones where it doesn't just, like, chirp.

But exactly, yeah. Like, it does the tracks and alarm? I've never actually asked them. I don't expect, if the company report's earnings, I expect the analyst to be awake. Wow. And I'm awake, too. Like, you can't. Like, that would be like, wow.

That's happened like once in my car. Do you go back to sleep then? I try to. But don't. But like, I try to do, but like, look, it's like. So the analyst, I just want to have a split screen. So you are in Miami, you're up. The analyst is in a one bedroom in New York City.

Yeah. Laptop in the bed. On the phone with you, it's 3 o'clock in the morning. Company's about to report earnings. His girlfriend doesn't understand why. She's already at the couch in the other room. And then it gaps down. It's gaping down.

It's red. We could see the red reflected on the analyst's face. It's a very great movie. Yeah, yeah, yeah. And then what are you telling them to do right now? Are you just saying, why is it red? It should be green. Well, I mean, usually it's red for the right reason.

And then it's just a matter of, like, understanding, okay, well, is the stock overreacting? Or, like, what actually happened? Does this actually change our view of the intrinsic value of the company or not? And, you know, that's a matter of, like, yeah, the analyst is, in real time, we're discussing what happened. And sometimes we're buying. Rarely we're selling, but sometimes it's like, sometimes there's a quarter where it's like, your whole thesis is just wrong.

Usually it's like your thesis isn't totally broken. Maybe the stock is down 5, 10%, and you kind of say, like, I understand why, but it doesn't really change my long term. So it's been 30 minutes now. You did your stuff. Now it's 4 o'clock in the morning. Do you go back to sleep?

Yeah, it depends. Because the analyst is not going back to sleep. I'm telling you that. Yeah, it depends. Like, ideally, I go back to sleep. It depends how Reddit is. If it's really radical, then it's hard. Then there's like, then there's like more like we have to like,

if it's like down 20%, it's not like, oh, that's an nurse and sucks down 20%. What's for breakfast? Yeah, let's go. Let's go. I'm going to go back to bed, catch in the morning. You know, it's like, then we're like, game on. Then we're like, then it might as well be through in the afternoon. Because we're, you know, deeply trying to understand like where, you know, where we were wrong or if we were wrong.

Yeah, you might be right at that moment, and it's time to buy maybe? Yeah, sometimes. Yeah. So, okay, let's talk about it. So what do you see? So now it's, you went back to bed because it was up 2% or something. You go back to bed. Yeah.

Now it's what, 7 a.m.? 6 a.m., you wake up again. And then you reach for your phone. And what's like in your inbox? What are you reading? Because you said you're not the NBC. That point, like the analyst, like, usually when the earnings report comes out, it's like, it's stressful for the analysts. Because like the couple of your reports, you're being judged on your...

A couple reports, and I'm like on the phone with them, I'm like, yeah, think. What's happening? And they're like, give me a second. You just digest the information. I'm like, think faster. And I'm kidding. But like, in real time, but not really. But in real time, the analyst is like looking at it and telling me like, you know, his perception of what's happening.

And then by the time I wake up in the morning, there's usually a thoughtful earnings review, which goes through in detail what happened. And, you know, I only go back to bed if, like, there's nothing that has to happen. That's like, you know, if we're not going to have to make dramatic changes one way or another to the position, I'll go back to bed. And in the morning, I'll read, you know, what is, like, the analyst has time to step back, think about it, type, write things up. And, you know, then we, by that time, like, you know, we have a few more hours of trading in Europe. We may do something. We may not. Let's talk about the across all markets.

there is this after-hours thing. And you would know better than me, but I feel like it's gotten even crazier in recent years where it reports the stock can occasionally act extremely erratically in like both directions. Like I think after app reported earnings last quarter, it was like down 13%. And then it opened the next day up 13%.

Yeah. What's going on there? And like you'd think thin, thin enough. Like at some point someone should come in and make markets. Well, look, for sure, this is not what we do, but there are bonds that, you know, as soon as their earnings report goes out, like, they are effectively having AI read the earnings report and interpret, and then it's just like, it's just trading. But when you're staring at that, do you, I presume sometimes will wait because you kind of anticipate this thing to flop around for a while? I mean, we transact in the aftermarket, but it depends. Like, if Invidia reports, the aftermarket liquidity is going to be huge.

If a company that's $10 million rewards, it's a waste of time. If you try to buy the stock, you're just going to send it up too much. It's like better a way. Dan's in the business of money management, efficiently allocating capital to companies around the world. That's the job he signed up for and seems to be going pretty well for him so far. But what we see at Stripe is that as companies scale, every founder, every CFO, every finance team, they are becoming money managers too, and not in the way that they want or that Dan does. Managing a fleet of international bank accounts, dealing with trapped liquidity,

paying global teams, it's the kind of complexity that creeps up on fast-growing businesses. At Stripe, we believe that Treasury Management should be fast, globally native, and programmable. And that's why we're building a new financial home for your business right inside your Stripe dashboard. You can now do things like whole balances in pounds, in euros, in dollars, and convert between them instantly 24-7 and at low cost. If you need to pay a partner, you can send money to over 150 countries with just an email address. explore Stripe's new money management capabilities at stripe.com slash treasury. So like another thing funds will often do is as they get big, they'll expand to other kinds of products, macro.

Does that ever something you think about? Definitely not macro. First of all, like, it's tempting to think that because you're good at one thing, you're going to get all these different things. And I think that in and of itself was like a mistake. but the thing about my business that I like is that if you buy a great company you might be wrong for a little bit but time is your friend

like you own it maybe it has a couple bad quarters doesn't go up blah blah blah but as time goes on the company compounds value it grows if I'm going to short U.S. government bonds I might never be right

like there's not like it's not like oh like over time it has It has to go back to 5%. Like, so you're just basically making a bet where like on my job, I like the fact that like, if you buy bad businesses, you don't have that. But if you buy great businesses, you overpay for them a little bit. You get the earnings wrong a little bit in the short term. Over time value, you know, compounds and time is your friend. Macro, that's not the case.

It's more of like a binary bet. So you have this story of like, it basically takes time and then the market catches up. Do you have like any particular stocks that you can share where like the markets didn't get it for a very long time? And it actually took quite some time for it to catch up? Yeah. I mean, sometimes it takes the markets like years to really get it. What's an example? I mean, Netflix is an example.

I mean, like, if you really like... And is the get it moment the multiple expansion moment? Yes. Okay. So that's really the thing, right? Yeah, the interesting thing about, like, when people don't get it. So if I told you, like, what's logical, okay? Let's say you have a company, here's a good example.

Booking.com, okay? Which was called price line back when I owned it. It was growing 40% a year and it traded nine times earnings. Okay. Why did it trade nine times when it was growing 40% a year? Correct. That's not meant to be an occupied corner of the scatterers. I mean, you have to be, yes, it didn't make.

a lot of sense. But like the narrative back then was like, okay, they're just like Arbing Google and like this, this is like a flimsy business model, whatever. Now, you know, years go by. I don't know how fast booking is growing right off of my head, but I imagine it's single digits. High teens, I think. Is it that fast? Okay, it's like, it's, I'd be surprised if we're growing high teams, but, you know, it's a lot slower than it used to be. And it trades at like 3x the multiple, right? So like the multiple should be correlated with growth rate. But sometimes, The market is just so skeptical about the business model that even as the business slows, the multiple goes up. So it would be fair to say that D1 makes... I think meta is trading at a higher multiple than it did for the last 10 years. And, I mean, we'd have to look, like, don't take that as fact. But I would say meta's multiple has expanded over time, even though, just with the law of large numbers,

it's still growing incredibly fast for its size. But it's growing slower than it was 10 years ago. But now, I think for Mehta's whole life, there was a lot of question about, like, the mode and TikTok and this and that. And now it's growing slower, but it has a much higher multiple. But would it be fair to say that D1 makes most of its money on this concept of multiple expansion? Like, is that the actual trade?

Yeah, so that's what I wanted to ask about, because, you know, Ben Graham talks about the Vosin machine versus the weighing machine. And if I read a D1 memo, it'll all talk about company fundamentals, voting machine stuff where, you know, Siemens Energy is a great business and, like, there's going to be so many turbine orders because of AI and the wind thing is complex,

but it's actually grand and whatever. But over a one-year period, the largest part of stock moves, as Daniel is saying, will be multiple expansion, which is basically sentiment. And so, aren't you actually in the sentiment? Is it vibes? Are you kind of vibe-trading? Yeah, I mean, I like to think of myself

being a little more acting everything by trading. But like, look, it's, I think that it's, you're always going to make the most money for multiple expansion. Just like, it's hard to have that differentiated view on a company's growth rate. You can have a different, you can have a different, you can have a different,

you can have a different view on like the longevity of the growth rate or, you know, the ultimate margin profile of the company based upon, you know, some work you've done. But the multiple, over the long term is a function of like the perception of the stability of the cash flows over the long term. And sometimes people are skeptical of a business model, and then over time it gets proven out that the business model doesn't deserve to be,

have that skepticism, and then the multiple expands. You do make most of your money on multiple expansion. And that's why I said at the beginning we talked about, like, you know, like actually like gauging what is the right multiple for a business is quite hard. And when I sell companies too early, it's almost almost almost, always because we use two low multiple at exit. If I'm a non-profit, if I'm Ark, or if I'm the pen endowment, or, you know, pick a non-profits. Not like Kathy Woods Ark.

No, no, sorry, no, I'm not. That's a nonprofit, too. Yeah, yeah. But, okay, if I'm a nonprofit that you want to help out, and I say we need to put all our money into a single stock for the next. We're not going to touch it. We're not going to look it. We're actually going to lock it up contractually for the next 10 years. Awesome.

What would you recommend? I think we start narrowing it down. Like there's very few tech companies I would say, like, I feel comfortable saying, you know, because I just think tech just changes too quickly. So it wouldn't be a tech company. It would have to be a company with like a moat that I just felt like would be incredibly difficult to penetrate. With the growth rate that was probably not like super high, but well above GDP for a long period of time. and you're including valuation in this equation.

We're just going to buy a stock for an on-profit endowment now, and then in 10 years' time, we're going to sell. It's an odd trading strategy. We're in the non-profit business and stop the investment business. I like Siemens Energy quite a bit. I think that you may get a lot of the multiple expansion in the next two years, and then the next eight years might be less exciting. We're not even going to look at it over the 10-year period.

I like, there's a couple of things. called Clean Harbors, which I like a lot, which is they do hazardous waste, and they own the majority of the incinerators in the United States. You can't really build more incinerators because of NIMBY. And as you have more on-shoring, there's going to be more hazardous waste, and they have both the incinerators, and they have the network to go collect. And so it's just very, very good business. And the starting multiple is pretty reasonable. And I think, you know, I can grow earnings well into the teens for 10 years. I would tell you, like, I think that predicting things beyond three years is incredibly difficult.

I've seen more instances of my career where, like, things change in a way you just couldn't expect. And, you know, that happens all the time. Yeah, so 10 years is hard. Why do you like Steven's energy so much? Look, I think that over the next five to ten years, you know, first we started with, you know, training these AI models. And I think we're still in the early stages of that, this is early innings. You know, at some point the scaling laws will asymptote out, but I think we still have years of high energy use as to train models. And then there's going to be a really long tail of inference.

And so I think that, and interestingly, the gas turbine company, just being Siemens Energy, G. Minova, Mitsubishi, they are not AI, they're not AI native, right? So, like, when they look at this, they say, like, hmm, this is like every other cycle we've seen. This is, you know, we're not going to do it again. We're not going to build capacity. And then all these crazy people who are building these data centers, all of a sudden realize it was a bad investment. And we're all stuck with the capacity. So I think that there's a disconnect between what people in Silicon Valley think it's going to happen next 10 years and with gas turbine at you. It actually. I think that gas turbines are going to be in shortage for a very long time.

Because all of the producers are conservative by nature. Conservative, yeah, the conservative nature. Because Siemens are literally German. By the way, it's not crazy. You look at it, you're sitting there in Germany, you're like, okay, Masa is putting in tens of billions of things. every day there's an announce to $100 million. This sounds insane. I am not getting aboard with this.

I tend to think that the consumer manufacturers are more wrong than... And then, you know, look, I think that the electrical grid in the United States and globally, people will not invest in the electrical grid at all. Because electricity demand, the United States grew at 0% for the last 20 years. And so, if you think with the next 20 years, I think electricity demand will grow at 4%. It doesn't sound like a lot, but if you compound 4% over 20 years and you have invested for 20 years before that, it's very material. The second thing, they have a few businesses, but the main ones are important, gas turbines and then products that upgrade electrical grids. The other thing about electrical grids is not only have they not been invested in, as you start to introduce solar farms and wind farms and people having solar and house,

all of a sudden you need to have a much more dynamic. It used to be you have a power plant. That power plant sends power out through power lines to houses or businesses, and that's it. Now all of a sudden you have solar wind producing power in faraway places that then have to connect to the grid. Now the grid is handling both consumers actually consuming energy and actually sending energy into the grid. So, you know, the grid just wasn't set up to, one, handle the amount of energy it's going to be consumed in the United States and globally. And two, it wasn't set up for all these renewables, which are going to fragment the electrical production, you know, in all kinds of different places and require that it's not just like one power plant's setting it this way. It's going to be, like, pretty dynamic distribution of electricity.

Should we be thinking of, so if we take Siemens as an example, so they make the turbines. Seams Energy. Seamins Energy. The turbines are in short supply, so the price goes up. The commodity producer in this case, Siemens does not want to produce more of the commodity because they're free of cycles. So in theory, the amount they can charge should go up.

The shortage goes up. But then I would assume if they don't produce more and demand continues to go up, the year at which you would get your turbine should also elongate. So it goes from 27 to 28 to 29. And then you start to ask the question, are there other sources of energy we should be using? and then you know

you get into the whole battery thing and whatever. The solution to long lead times is long lead times. Yeah. And just my question is, do you ever think, you know, as you think about like,

oh, what the right price for the stock is, is there a point at which like the lead time becomes so extreme that because at the end of the day, people don't want the turbines, they want the energy, that like other forms of energy become more exciting somehow?

Yeah, I think it's two things. I think one, like eventually, let's assume that Silicon Valley is correct. And all this investment is going to be high ROI, and therefore they're going to keep doing it. Eventually, I think Siemens and Mitsubishi and GE will say, you know what, we have to build some more capacity. That will happen.

I see. I think over a very long period of time, nuclear will be probably a more viable option for energy. That's probably the best, you know, in terms of like taking everything into account, like steadiness of like the electricity, environmental factors, nuclear is much better than gas. but nuclear plans take a really long time to bring on

and have all kinds of other complexities. So I think that two things will happen. I think over the very long term, there will be more nuclear. But I think that people miss that, like, the United States has been pretty early in building out these huge clusters. Most countries in the world

that have developed economies are going to need to build out, maybe they don't need to have the same kind of clusters at Open Eye as building an appellene. But they're going to need to have probably for national security reasons, their own training clusters. And at a minimum, they're going to have their own inference clusters. So I think that, like, everyone's, like, focused in the U.S., and the U.S. is important, but, like, this is going to happen everywhere.

AI is not going to continue to the U.S. It's going to happen to the U.S. It's going to happen in Japan. It's going to happen in Korea. So I think that the tail on this, it may be, like, like, any kind of, like, the Internet, it may be, you know, there may be... Have been full. ...overbill, and then they, you know, but, like, if you... look over 20 years, like, I just think that, you know, electricity is basically intelligence, and, you know, intelligence is what everyone's investing in, and ultimately the bottleneck is going

to be electricity. And so companies that enable electricity production, assuming they have some moats, are going to be good investments. And I would tell you, interestingly, like going back to the Europe comment, Siemens Energy, and G. I vernova, are basically the... the same company. Like, there's no two companies I've ever looked at that are more similar. They have almost the same revenue, dollar. Revenue, I think it's like 45. So 50. The products they sell are pretty equivalent. Nobody would say, like, this one's a rat leader. They sell, like, they're in the same businesses. Turbines, electrical grid, and wind energy.

Gero Nova trades at 2x the enterprise value of Siemens Energy. Just to give you a sense of, like, And ultimately, there's no reason why the margins should be higher, Cheever Nova, the revenue basis is the same. So I think the Europeans are implicitly just a lot more skeptical of the sustainability and longevity of this AI cycle. And that has to narrow one way or another. I think I just, I don't think you can have two companies in one trade at half the price the other one,

and there's nothing about it that's actually worth. There's also the other open mystery, which is, I think, I believe the onshore TSM trades at a 20% discount to the U.S. ADR. What's going on there? How is that possible? That is also extreme. And it just shows you, like, you know, the U.S. equity markets either have more liquidity or just a different perception of the risk inherent in buying T.S. TSM. And 20% is quite meaningful for the same company.

Yeah. But Ciener's 50% discount. Now, I understand TSM is the same company literally. But like these are pretty close. Yeah. Well, okay, you raised different regions trading at different multiples and you raised Asia, which is a great segue. Everything in China is really cheap right now. You know, Baitans trades it really low multiple, Alibaba trades it a really low Do you guys do much in China? Yeah, what's going on there? Is that just a value trap? What's going on there?

Yeah. We stopped investing in China about three years ago. So, look, everything has a price, right? I think that the reason we stopped investing there is fundamentally I have an issue with the way their economy works. I think the government has way too much influence on how resources are allocated. And so, sorry, you have an issue as a, like, as a moral matter, or you just have an issue is a practical capitalistic.

Practical capitalistic matter. I'm not making moral judgments on China. I personally don't think it's the best. You're just saying you don't know how to predict how the market will perform. Look, I think that what markets don't like is uncertainty. And the problem with China is twofold. One is that the government has way too much influence on how resources are allocated. I don't think they're particularly good at making those decisions.

As you saw during COVID, when they shut everything down for no reason for, you know, And they will arbitrarily decide which industries are important and which ones are not important. And if you make too much money, that's bad. And so, like, all of those factors, like, you know, for a while we were seeing the Chinese Internet companies, like, they didn't want to beat earnings. Because if you beat earnings, your stock goes up too much, you know, you might be flagging that, like, you're over-earning and, you know. This was, you know, so then. If you look at a company, if you know they're not going to beat earnings, what are you left with? You're left with a distribution which is not particularly attractive.

Yeah. And so I think that like the economy there is, you know, it's just very, very difficult. That being said, I think the valuations are extremely cheap. And I think the Chinese people are probably the most commercial, hardworking, smart. you know, I would, you know, if you look all over Southeast Asia, you know, the best companies are usually run by Chinese. Like, Chinese people are incredibly industrious, incredibly smart, incredibly commercial. So I find it kind of sad that, you know, what's happening in China is stifling innovation

that probably would be better than, like, before this all happened, if we went back 10 years ago, I think we would probably all sit here and say, like, these Chinese Internet companies are actually probably technologically ahead of where we are. TikTok was, you know, obviously came out of China. Like, you know, WeChat was like, really the most, probably the most advanced form of social media globally. But, you know, the way governments behave is incredibly impactful to come.

So I think the tech is very cool, but just fundamentally being an equity holder there is hard. The tech is very cool. I just don't think it's progressing at the same rate it used to because a lot of the great entrepreneurs have left because they felt like the environment for starting companies, for, you know, driving new innovation that was going to make a lot of money. Like that wasn't something that was like looked favorably upon by the government. So the best people left. A lot of them went to Singapore.

And that, to me, like, I think that's a shame because with the right government and with the right economic system, China should be, you know, the, most important economy in the world, and it should be technological leader, and I think the geopolitical tensions would be entirely different, and I have a ton of respect for, you know, what China did from 1970s to 2020, like, I think it's pretty much an economic miracle. But we've seen the last five years is, like, governments matter, and, you know, it matters what your political system is, and it matters how the government intervenes, and due process matters. There's the famous case where many of the

digital education apps were banned overnight. Does that really update your view of China? That, like, investors hate uncertainty. And you want to, like, okay, like, in the U.S., like, can something bad happen to social media companies? They get to go out in front of Congress.

But there's due process, right? Like, you know that, like, there is a system that you can't have Donald Trump can't just wave his hand and get rid of meta because he doesn't like the fact that, you know, They're allowing people to say bad things about him. And so when you have a government that can act capriciously, that has a humongous gravitational pull on valuations.

Some big picture questions related to China. So there's all these charts one could look at of the concentration of Mag 7 into the S&P 500, and you could look at the 1970s equivalent of the Nifty 5050. There's the inflation, which seems to be tracking the double hump story. first of all do you have do you like care at all about these analogies like do these analogies mean these charts with all the jpeg artifacts on them they're always very convincing

I mean like I think there's like you look history rhymed right and like and the same thing in the market so like there is like it's interesting to look at what's happened historically to these companies it's dangerous to say like look at it and just extrapolate to the point where you say like it's correct on the chart yeah but then my question would be, what would be the sign for you actually that the bubble is close to peaking?

Like, is there something, an anecdote or an actual piece of evidence you look at you to say, like, okay, maybe we all believe in AI, but we... So you're saying AI is a bubble? No, I'm saying, I believe in cyclicality. Yeah. Like, the internet worked, but it was also a bubble. It was also a bubble. Derek Thompson said this recently in a way that I liked, which is people associate using an AI

that AI may, you know, currently be or in few. be a bubble as like some kind of negative statement. But because every major tech change, the canals, the railroads, the, you know, internet, whatever, has been accompanied by a huge speculative bubble. Because kind of it has to when you think about it. Yeah. Yeah. That it's actually.

Right. But it's an AI optimistic statement to make that there will be a bubble. We are actually celebrating how important it is. So Daniel is saying he's an AI believer. Yeah. And AI is clearly going to be a big thing. Therefore, is like, is it this year? Is it next year?

Like, when is the bubble? Look, if you look at the checklist of things, you kind of want to look at for what's going to be closer to the bubble, if you went back like a year ago, you'd be like, okay, like, yes, there's a lot of money being spent, but these companies have massive amounts of cash flow. Microsoft picks up on the cash flow. Once you start having debt-fueled investment,

that's usually, you know, a bad leading indicator because obviously, like, when you have a lot of debt, like there's not much, you know, room to make mistakes. And you are seeing like some of these latest projects are debt finance. I think that nobody knows, like I think even if you spoke to, you know, I know when Daria was sitting here, it's like they invests, they keep investing in training and maybe it's pre-training, it's post-training, but like at some point the returns on that training are going to be disappointing. And then it's the people to be freaked out a little bit. But usually then the next time it's like back to okay, they have, you know, the next model is good. At some point, but we're going to say, well, we're asymptoting out.

Like, the returns on this new investment are actually not working. That's when I think you'll see a pretty big correction. Okay, so there's the theory that there's a correction because the returns to pretraining start asymptoting. And then there's a theory of bubbles, like if you look at the 1970s and to some extent. dot com, which I think was really hampered by the fact that the Fed raised rates into 99 and 2000, there's another view of bubbles, which is like there's an awesome thing happening. Everyone gets overexcited, but then some random thing hits the bubble. And because things have run up so much, everyone starts panic selling all the way down because there's all the people that bought in their

cost bases of, you know, Nvidia, not to pick on anyone, is like $4 trillion. So then, and so my question is, um, do you think we're in that mode? And is this like a productive line? Like, At D1, do you guys ever think, like, oh, like, what could be that thing and how do we prepare for that thing? Or do you sort of think, like, that's like... I think to our detriment, we should have owned more AI stocks. There are definitely, like, things you go down the list of like, what constitutes a bubble. And you can check some things, like, you know, massive debt. Massive debt-fueled investment, just like people were building fire.

What else is on that checklist? Valuations. So, like, in, you know, and bad companies, trading crazy valuations. I would tell you, like, Invidia is, we can have a debate about what the earnings are going to be in a few years, but it's not expensive. Like, Nvidia trades a 20-something times multiple. That's, you know, I think within reason, and I don't think there's anything I see in the public markets, which is like bubble-like from evaluation standpoint. I think if you look back in history, 70% of the time that you have this kind of like major breakthrough. through technology, there is a stock market bubble.

And maybe what you're seeing right now in some of those retail stocks, like we're open-door goes from one to 10, maybe that is like things are starting to bubble. And, but we haven't seen like large-cap, I don't think the large-cap AI stocks are trading at crazy valuations at all. So we're not seeing that yet. So maybe we're just, maybe it's 1997,

and by the time that, you know, We're in the equivalent of 1989, and video will be three times higher and it's possible. Some said to me recently as well, for a proper kind of crisis, you also need things that people thought were safe to not try to be safe. Like in 2000, when the NASDAQ went down, 85%. It's like, well, that's a real bummer,

but we did know that we were buying these highly gassed tech stocks, whereas it's when the debt actually turns out to not be safe. That turns out to be equity. Exactly. Yeah. That's when you get real issues. It's very different in 1999, though. Like, there were horrible companies, like,

which had, like, no real economic prospects trading at crazy evaluations. I'm just not seeing that in the public markets now. Yeah. I'm just not in AI. Yeah, yeah. You're a huge fan of SpaceX and a big holder. Why are you so excited about us?

What's going on there? Everyone understands, like, Elon is, you know, an amazing inventor and an amazing entrepreneur. I think people underestimate how good of a business person he is in that, like, It's like, okay, like, yes, does he invent great things? He does. But he is ruthless about bringing down costs to a point where his business becomes, you know,

a natural monopoly because it is a low-cost provider. With SpaceX, you know, the whole problem with space in general doing anything in space, historically was that he was very expensive to launch anything in the space because, one, the rocket blew up. And, you know, therefore, like, it better be really high value if you're going to set up there because it's like, if you're going to take a plane from New York to L.A., and every time you do it, the 747 blows up, the same thing gets to be really expensive. You better really want to get to L.A. Right? I think so the first thing is, like, the idea of bringing down the cost dramatically by making things reusable.

Now I think, like, he was like five to ten years ahead of everybody else. Now, obviously, it's more reusable. and the scale of the rockets is getting so big, and each rocket will be able to flow more than 100 times. And so the cost per ton of launching things in the space is going to go down by relative, like, five years ago, it was going to go down to like 99.9%. Like, it's dramatic.

And so once you bring down the costs that way, obviously, like, the first order effect is, like, you launch a bunch of LEO satellites, which gave us this great Starlink. And I think that will continue in a way that probably surprises people in that, like, I think SpaceX will probably capture more of the global telecommunications market than people expect. You saw them buying Spectrum from Echo Star. But then it's like, okay, so if you really step back and say, like, well, what else should we

be doing in space if the cost per ton is, like, dramatically lower? I value the company based on the launch business, which is a near monopoly and a fantastic business. And then our expectation, like what happens with Starlink, which is just a matter like P-Times Q-Subs. But when you bring the costs per ton down so dramatically, you open up markets that they would say, like, yeah, you fly from L.A. to Sydney in 30 minutes. Or we start having solar panels in space that are, you know, people say data centers in space. I don't know what it's going to be. Certainly there will be U.S. defense deployments in space, right? For sure.

And then I think there's a lot of option value. Like I look at it and say, like, I think the business can triple without having to make any big bets about people traveling 30 minutes across the world or, you know, data centers in space. But there are, like, legitimate, like a lot of medication is better manufactured in space than it is on Earth. There will be plenty of allocation over long term, and that's why I think it's equivalent like Tesla's Robotaxi. There is this option value out there that, like, no, Tesla's not an EV company.

It is, like, going to own global transportation because it's a low-cost provider, and it's, you know, and so I think you have that with SpaceX. And that's why I like it because you have the downside of the cash flows from Starlink in the launch business, but you still have the option value of, like, all the things we could dream about, which are impossible to quantify.

I totally agree on the underappreciated aspect of Elon being the business savvy, where, let's not forget, Tesla invented a new mode of selling cars direct to consumer. They had to get the laws changed in certain states because the current dealership system was enshrined, similarly with SpaceX. For what they do, it's actually a very capital-efficient business, and they've run it in a, you know, they've built it with profits rather than venture funding, or they've built up with revenues, customer revenues rather than venture funding. And so I think that's really under-reasing. I think he's a better business person than he is inventor. He's amazing at both, but, like, people don't understand. Like, he just naturally understands, like, just get the cost down, get the cost down, get the cost down. And that's very hard to compete against.

Do you want another? Sure. Sure. Great. You keep going there. You know, they say stripe is actually controlled by an Irish mafia behind the scenes. Did you actually, I mean, it's quite interesting. I didn't realize until you said it, that D-1 is mostly.

cry that's now. By size. Yes, by size. Do you expect that to happen when you started? No. I did not. I did not expect that to happen. It's actually just more a function of how things played out than it delivers strategy for us to grow the private business at the expense of the public business. Our public business went through some big ups and big downs. And like, you know, I think our public business, we are, and look, there is a, and look, there is a limit to how much we can manage on the public side.

We announced a few weeks ago that at the end of this year, we're going to be closing the hedge fund. We may replace redemptions, but the most important thing is, like, in our business, returns are negatively correlated with size, and especially on the short size. Because you just own too much of a company to, like, you move the stock when you try to trade in stuff? It's not so much on the long side's on the short side, because you turn things over, and it's like, if I'm $30 billion, you can't really short $5 billion company.

companies and most... Could you not grow EUM and be more long exposure? Probably what you'd want to do is, and what we may do in the future, is what other funds have done is like you have your hedge fund which does long short and then you have a separate fund which is like just long only and that can scale quite a lot because we tend to hold them longer and you can buy very large-cap companies. So privates. So what were your first private position for D-1?

Let's take a question. We launched, I think our first private position at launch was I rolled a stake. I had taken a stake starting in 2010 in a company called Lineage, which is a cold storage warehouse company. That I rolled off of my personal balance sheet into the fund. And then we made subsequent investments. And then, you know, in the first couple of years, like we did a variety of. of different things. Some, I think, worked out not as, well,

Jewel was like a, I'm not quite sure if that was, it was good and bad at times. I think it's going to be good now. And then, like, you know, we did ramp really early. That was good. You know, John was nice enough to allow us to invest in Stripe. Yeah, how did you underwrite Stripe? Because, again, we weren't profitable at the time.

And I don't know, yeah, what does the process look like for something like that? I actually started out. my career as a financial service analyst, so I had looked at all the card networks, all the processors. It was pretty clear to me that the competitive set in merchant processing was very mediocre at best, and that their technology was not conducive to most internet companies, and nor did they have the tech stack that would allow them to adjust to what was happening in terms of e-commerce. And, you know, look, at the end of the day, it's like, I think that there's going to be one, maybe two companies that actually can provide the technology for companies to enable e-commerce or any online transactions. And you guys seem pretty smart.

So, you know, we do a lot of work on managing teams. And, you know, huge market, great managing team. We competitive set is like, you know, perfect recipe for making a lot of money. So you've got Ramp, Stribe, SpaceX, and, you know, maybe one day, of course, all these companies go public, but it would seem as if there's, like, a lot of later stage private companies now. Well, like, why do you think that's happening and where do you think that's going to go in a couple of years?

Like, our public market's just going to kind of be the last. laggards and all the new hot stuff will be private or will it rebalance one day? I mean, if I ran a private company like Stripe, I wouldn't go public. I think the public markets, you know... It's kind of ironic because you're a public market's investing. Yeah. I think the public markets are kind of problematic at this point. Let's just take Stripe, for example, and I won't speak for John, but basically, you know,

Stripe grows, earnings, cash low at some amount, value compounds, and they do tender offers, and the tender offers are relatively in line with the value creation. And therefore, the people who are working at the company and are creating that value, get paid for that value because the stock price goes up in line with value creation. Now what we see in public markets

is you take your company public and depending on what the retail crowd is doing that day, the stock may trade it some insanely, insane value, right? And like most people are like high-fiving. This is amazing. Our stock is like trading, 2x where it should be, this is great, we're all rich. The problem with that is that like,

you've now pulled forward a ton of value. And so all the people working at the company now are being overpaid because, you know, they didn't actually create this value. The stock gave this value. And then like the people who you're hiring, and those people are probably more likely to just cash out because they've just made too much money.

You're robbing future employees to pay current employees. Exactly. And then like if future employees, now you have to give them stock options that are us use at a stock price you don't really believe in. And so the stock is so volatile that like you're actually not being paid as an employee based on value creation. You're being paid arbitrarily based upon like multiples which have nothing to do with the true and change of value the company. So it's like I think it's like obviously it's bad to be undervalued as a company because then you're issuing stock to employees at too low of value. And like and then they don't appreciate it usually.

But it's pretty bad to be overvalue, too. Because, like, you know, employees, if the stock doesn't go up, they will definitely come back to you and ask for more options. If the stock goes up way more than it should, they're not going to come back to you and be like, oh, you know what, like, hey, you know, I made too much money, like, you know. And so you end up having this, like, asymmetric, you know, I think it's really not a healthy dynamic to be a public company.

Is there anything that should be changed about the public markets to make it better? So, for example, like, you know, Robin Hood got rid of commissions. Is zero the correct amount of friction for entering and exiting trades? This is hard. I had breakfast with Vlad this morning, and I really like Vlad. I think that it's a moment in time. My view is that over the long term, stocks will go to intrinsic value. Yeah.

It's taken longer than I've expected for some of these things. Like, it's definitely like... Some of the shorts you were here. I still believe it. I believe it. I can't tell you how to have a lot. evidence that's the case. But that will happen.

That doesn't necessarily help a company like stripe if they go public and like if eventually in five years it's in fair value but in the meantime they're just kind of like whips up and down. That's bad. I'm not sure you can do anything to change markets. Markets are inherently volatile.

It just so happens at like at this moment they are more in the, like you would think that like in the current world if I told you that like we just have perfect information. Everybody has all the information. It's like at your fingertips. Everything should be more efficient. Yeah, yeah. Wow. Stocks are going to be so correctly priced. It should be correctly because everyone has access to the same information. It's actually gotten less efficient over time, for sure. And I don't know, I don't think you can just necessarily fix that.

You mentioned starting your career as a banking analyst. How is the banking industry changed? You know, look, most of the banks tend to be. very dominant in one geography. They're not like tech companies, like Google or meta, where they're just dominant. Like, JP Morgan is dominant in the U.S., but Europe doesn't matter. Like, same thing with the European banks.

Up until now, I think the legacy banks have more or less in most geographies been able to keep their market share. However, you increasingly are seeing banks like New Bank or Revolut, that don't have the tech debt of like mainframes and old code. And just offer better customer experiences. Don't have branches.

Yeah. I iterate on product faster, have better engineers. And I think that those banks are going to increasingly take market share. New banks have happened in Brazil with New Bank, have happened in Europe, with Revolution Monzo and people like that. Haven't happened in the US really. And there's probably other GOs where they haven't happened. How do you do the view on will it happen in all markets? Are certain markets more impervious than others?

I think that it depends how good the incumbent bank is. I think J.P. Morgan is a very well-run bank and the big banks will run. But do I think that they are vulnerable to disruption? Definitely. But you still buy bank stocks, so how do you get comfortable? Then there's like a more theoretical question of like, okay, well, if all these AI agents, basically, if before Revolut and New Bank just hired the best engineers

and so they were just like, that's actually going to be J.B. Morgan. But if like AI agents make, you know, now everybody has the best engineers because best engineers are actually not people. They're just agents. Maybe J.P. Morgan can be as good as other companies. That's theoretical.

It's probably not correct. In the U.S., I haven't seen someone come in and be that disruptive. But is that because of market structure reasons or just we haven't seen the great founder yet? It's a good question. I mean, like, banking is not, it's not like you have both sides. Like, you need deposits, you need to provide credit, right?

And you need a lot of scale. And a market, like the U.S. is much more difficult to penetrate because it's so big. And the competitors have so much capital to invest. Whereas, like, smaller countries, like, Revolut internationally has, like, low, single-digit, mid-to-in-legit market share in every country. I think that'll keep growing. But they don't actually provide credit. Right.

So I think we're in the early days of disruption. I think you roll forward like 20 years. There's going to be some companies that didn't exist 10 years ago, but are going to become enormously large banks. But I also think the incumbent banks are probably going to innovate enough that they're not going to go the way of like JCPenney. Last question. If you're a youngster interested in investing,

you have views on companies, but you don't feel confident yet in how to underwrite and construct a model and things like that. What advice would you give them, someone who's interested in this stuff, but still getting their feet wet? I think that pretty much with anything you want to do in life, I just believe that reading, like, just incessantly is like the way to, you know, get ahead. And investing is so differently. Like when I was, it's just like read stock pitches like over and over and over again and then watch those stocks, see how things play out. Like the market will be your mentor. Like and but I think he's just like really like I learned by there's a website called Value Investors Club and like I just read everything that people pitched.

And I had you want to have some like framework. I liked reading Buffett's books because, you know, he has some faults obviously but he just like, He has a way of distilling down the complicated into very simple ideas. And so I read a lot of Buffett books. I read a lot of stock pitches. I didn't get my hands on with regard to what's happening in technology, what's happening in the economy. To me, it's just like the more you read, the better you are. Obviously, the Buffett stuff is very worth reading.

And there's the Cunningham book that takes all the letters and smushes them together. That's my favorite book. Exactly, yeah, yeah. So that is a classic. And a lot of people listening have probably read it. so all the Berkshire letters. What I actually read recently for the first time is if you go back and read the Buffett Partnership letters,

so this was the partnership he had with which he bought Berkshire Hathaway and kind of turned it into, but this was like a fund, more of a hedge fund than kind of the Seacorp that is Berkshire. What's interesting is I find it stylistically very different. This is the late 50s, early 60s, and it's before he got so polished. You know, it's before he got so foxy and approachable,

and careful in what he said. And a little more of the raw ambition is on display before he sanded that off. Yeah. And it's, I don't know if you've gone back and read them. I haven't read them. Oh, it's awesome. I'll send you.

It's really good reading. But the original Buffett partnership letters are kind of, I mean, obviously it's Buffett, so it's similar in a way to the Berkshire letters, but I actually think they're better in certain ways. Yeah, he's a brilliant guy, but he actually does like to portray himself in a certain light. The buffer partnership letters felt more authentically. Yeah, they shine a light on who he truly is.

But it's been good for his business to portray himself in that way. It makes sense. You can argue the results. Yeah. All right. Dan, Daniel. Thank you guys. All right. Thank you. Thank you.