Michael Mauboussin on Concentration, Capital Allocation & Attributes of Great Investors | #545
Today’s guest is Michael Mauboussin, Head of Consilient Research at Counterpoint Global, a $70 billion equity manager. In today’s episode, Michael covers some of his latest research on market concentration, equity issuance and stock buybacks, and how the boom and bust cycle relates to AI today. He also shares some common attributes among great investors, lessons from Elon Musk & Tesla, and more.
Key Points
- Capital allocation strategies, particularly equity issuance and buybacks, are powerful signals for subsequent shareholder returns and reflect management's confidence in their stock's valuation.
- Market concentration, while currently high and dominated by a few large companies, has varied historically and is influenced by economic profit distribution among top firms.
- The shift from tangible to intangible investments has changed the landscape of corporate finance, affecting how we should interpret financial statements and evaluate company performance.
Follow Michael: Michael's website; Twitter; LinkedIn
Michael's Research Discussed in the Episode Which One Is It?: Equity Issuance and Retirement - July 2024 Stock Market Concentration: How Much Is Too Much? - June 2024 Total Shareholder Return: Linking The Drivers of Total Returns to Fundamentals - October 2023 Birth, Death, and Wealth Creation: Why Investors Need to Understand Corporate Demographics - July 2023 Stock-Based Compensation: Unpacking the Issues - April 2023 Capital Allocation: Results, Analysis, and Assessment - December 2022 New Business Boom and Bust: How Capitalism Experiments - June 2022
Michael's Book Recommendations Brave New Words: How AI Will Revolutionize Education (and Why That's a Good Thing) by Salman Khan A Brief History of Intelligence: Evolution, AI, and the Five Breakthroughs That Made Our Brains by Max Bennett The Anxious Generation: How the Great Rewiring of Childhood Is Causing an Epidemic of Mental Illness by Jonathan Haidt Making Sense of Chaos: A Better Economics for a Better World by J. Doyne Farmer
Other Resources Discussed Tech Company Dilution: Finding Ground Truth by Thomas Reiner Seven Ways to Look at Stock-Based Compensation & Dilution by Thomas Reiner BG2 with Bill Gurley, Brad Gerstner, & Bob Mylod - 86 minutes How to Find a Great Dividend Fund by Morningstar Which U.S. Stocks Generated the Highest Long-Term Returns? by Hendrik Bessembinder Cash Flow Patterns as a Proxy for Firm Life Cycle by Victoria Dickinson
Sponsor: Today's episode is sponsored by YCharts. YCharts enables financial advisors to make smarter investment decisions and better communicate with clients. Visit YCharts to download their 2024 Election Guide & start your free trial today - be sure to mention "Meb" for 20% off your subscription (new clients only).
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Transcript
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