China, Reef Karim, Investment Analyst discussed on We Study Billionaires - The Investors Podcast
You're listening to t I, P. Hey, how's everyone doing out there? I think you guys are going to really enjoyed today's show. We have the talented Reef Karim. WHO's the senior investment analyst from ensemble capital management with us in the first part of the show, a reef talks about how he is adjusted his portfolio on the impacts of covid nineteen, then in the second half of the show reef provides an intrinsic value pitch for the fascinating medical, technology company, intuitive surgical finally at the end of the show, we a question from the audience about how the market can possibly be attempting new highs. Even though we're seeing all time, unemployment numbers in a devastated workforce so without further delay. Let's get started. You're listening to the investors podcast. Well, we study the financial markets and read the books influenced self made billionaires the most. We keep you informed and prepared for the unexpected. Let's take a quick break and hear from today sponsor. 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If you had to sign them developing these schedule free thirty minute consultation at mutual mobile dot link slash billionaires to get started. That's Mu T., U., L. M. O. B. I. L. E. Dot L. I. In key less billionaires to get started with your free consultation today all right back to the show. Welcome to the S podcast. I'm your host brought us as always accompanied by my co host Preston Pysche. Today's main topic is investing through covid nineteen, and in the second part of the interview Arif is also pitching a stock for US intuitive surgical. Which I think you will find very interesting. Are If welcome to our show? Hey thanks again. Thank you for having me I appreciate having chance to chat with you. I can't help, but kicked this episode off by talking about all the volatility that we have experienced especially since February, but it has been a almost unprecedented time just looking back. It seems like it's been decades, but it's only been a few months. I have to ask. How has it been for you and your team to menace a billion dollars, and then you see the size that portfolio just plunge, and then only to see the market having the largest fifty day trading rally ever and now we're close to an all time high. Can you talk through some of the emotions that you've gone through over the past few months? It definitely has been an unprecedented time have. Out of the I in our careers delivered through has been really interesting and dramatic. This namic obviously started in China and one of the things that perked up. Interest was when I saw after lunar. New Year in the second largest economy in the world basically shut itself down. That was an amazing thing to see. And while very fewer concern about it here. That got me interested twitter. Amazing platforms I started following frontline workers in that they anything reports Taiwan Hong Kong by people hearing things out of China epidemiologist started tweeting about things going on there virologists for interests trying to find the people who would understand more about what's going on in China on the ground, and try to get data from them I, just kind of fell. What happens there? How the dramatic steps that society to the government took, and then kind of follow that into Italy as well right Kennesaw how the spread their happened so long story short. We were following what was going on in the market. Here took about A. A month after started China shut, itself found to react and so going into it, we were to some degree prepared we had thought about our portfolio was physician. What kinds of implications we have under certain scenarios, and so although we are long only we don't generally take back robots, we can make tactical changes in the portfolio to make it as resilient as possible to whatever may come, and so while we generally physician the portfolio that way for all seasons of course, when you speak information about an impending storm, you try to mitigate damage from the storm by best your portfolio for that store. Having said that you know in general as we think about investing. We're humble the fact that. The world is complicated. Lots of surprises happen on a fairly regular basis, right? Each surprise might be new or a Black Swan New in our lifetime, but the collection of surprises happens. Answer were always prepared emotionally for ourselves, and we re clients as well. There is surprised to the upside good things in this rise of the downside, and we have to kind of take them. Them as they come all the while remembering that our portfolio has to be positioned in a way that lives and thrives post any sort of crisis, and so the drought was large, it was fast dramatic. Obviously, it's not easy to see, but at the same time entry it in a way where we're very confident about the positioning of companies that we all and the portfolio. So we're, we've talked to us a little bit more about this. You're not shorting the market. The timing is very tricky. But how did you specifically change your portfolio covid nineteen hit? For us, our perspective is that over long arc of time the market has returned something on the order of nine percent a year, and that's you know with big ears and big down years right? That's to be expected so to the extent that you can have a long-term focus on the value being created by the companies that you own and their resiliency. That's really important, right? Right so when Warren Buffet talks about never lose money. Never lose money in other words from a permanent loss of capital perspective, that's a perspective that we take which is that we only want to own companies where we have strong sense for the resilience and Competitive Advantage, so that going through episodes like this, we have a very strong conviction, their ability to survive and thrive afterwards. Afterwards having said that in front of any crisis and we were to some degree fortunate that we read the tea leaves right and saw this. What looked like potentially a big Su- Nami our way we did the things that any normal investor would do which is, we've thought about our companies? Powder balanced restructured. What kind of financing they would be needing the next three to five. Five years. They have access to the markets. Will we the revenue? I mean one of the companies that we own. Our portfolio is booking dot com, which we think is that great business men a resilient business by obviously it was going to be in the hearts of this pandemic right, the travel industry just gotten clobbered, and so one of the stress test scenarios around with booking. How much of a revenue declined, would they have to see for the start losing money? And our conclusion was that it would have to be somewhere on the order of seventy percent they will be able to survive the resilient enough, and there was surviving out of this hotels of even more dependent on booking to help them gain customers again, so they are competitive. Andrew be strengthened in. In addition you have to look at other things such as what is the probability that.