The Investor's Podcast (We Study Billionaires) - The Investor’s Podcast Network

TIP355: Why Facebook Is A Value Stock w/ Bill Nygren & Mike Nicolas

Jun 22, 2021
Guest
Mike Nicolas
Guest
Bill Nygren
Bill Nygren and Mike Nicolas, portfolio managers at Oakmark Funds, dive deep into the surprising potential of Facebook as a value stock. They discuss its asset-light business model and strong cash flow, highlighting its significant growth prospects despite current market skepticism. The duo also reflects on the resilience of Bank of America and explains how traditional metrics might undervalue tech giants. With insights into Facebook's long-term strategies and challenges, they encourage a reevaluation of investment approaches in the evolving tech landscape.
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INSIGHT

Bank vs. Fintech

  • Unlike many fintech companies, traditional banks offer downside protection due to their asset base.
  • Even in a worst-case scenario, banks can liquidate assets near book value, providing a safety net for investors.
INSIGHT

Deposit Pricing Power

  • Bank of America's pricing power lies in deposit pricing, not fees, due to the added value they offer.
  • This pricing power becomes evident as interest rates rise, benefiting margins due to lower deposit rate hikes.
INSIGHT

Facebook's Business Model

  • Facebook's business model is attractive due to user-generated content and targeted advertising.
  • The company has a comprehensive database and enjoys network effects, leading to high operating margins and low marginal costs.
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