Investing by the Books

Allocating capital is one of management’s most important jobs. Still, many decisions are suboptimal for shareholders. Why is that? In this episode, Jake Taylor - author of The Rebel Allocator - shares valuable insights on capital allocation and investment strategy. We also talk about biases, pricing power, and how to use a multidisciplinary approach in life and investing. For more info about the podcast, go to the episode page.—————————————————Episode ChaptersIntro(00:23) Intro with Eddie and Niklas(03:18) Charlie Munger calling and movie status(07:02) Feedback on and purpose of the bookCapital Allocation(09:21) Rational capital allocation(11:42) How to assess good capital allocators?(15:34) Incentives and suboptimal allocation(21:36) Analyzing a company’s capital allocation decisions(24:11) Thoughts on M&A storiesInvesting, Portfolio, and Strategy(26:06) Investing in capital allocators and Farnam Street Investments(32:06) Cheapest things on Earth vs. M&A machines like $CSU(34:51) Living and dying a value investor(37:32) Investing biases and Jake's systematic approachThe Multidisciplinary Life Approach(43:33) Stretching your mind by using Truths (49:45) Advantage of focus 4h of dedicated work(53:34) Importance of solitude and patience(58:12) Going on the Information Onion DietPricing Power and Company Valuation(1:01:30) Competition, differentiation, and pricing power(1:06:42) Financial modeling and price sensitivityBook Inspiration(1:12:09) A door stopper better than any MBA or finance class—————————————————Articles MentionedText interview with Jake Taylor - Investing by the Books (2018)—————————————————Books Mentioned(20:52) High Output Management - Andrew Grove (1983)(31:27) Intelligent Fanatics - Sean Iddings, Ian Cassel (2016)(45:08) The Half-Life of Facts - Samuel Arbesman (2012)(50:33) The One Thing - Gary Keller (2013)(53:34) Subtract - Leidy Klotz (2021)(1:13:36) The Complete Financial History of Berkshire Hathaway - Adam Mead (2021)—————————————————Companies Mentioned(20:25) GEICO (29:16) Coca-Cola, Procter & Gamble, Dollar Shave Club, Gillette(31:29) Berkshire Hathaway, 3G Capital, Capital Cities / ABC (Tom Murphy)(32:06) Constellation Software, Vitec Software(38:03) Berkshire Hathaway—————————————————More on Jake Taylor:Jake's book: The Rebel AllocatorJake's podcast: https://twitter.com/5_GQsJake's podcast: https://greenbackd.com/value-after-hours-podcast/Jake's twitter: https://twitter.com/farnamjake1Jake's website: Farnam Street Investments—————————————————What is Investing by the Books?Investing by the Books was founded by Henrik Andersson, Bo Börtemark, Mats Larsson and Michael Persson. It has published hundreds of book reviews in the past 10 years and operates on a non-profit basis. Visit the website: http://www.investingbythebooks.com/Follow on Twitter: https://twitter.com/Investbythebook—————————————————What is Redeye?Redeye is a research-centered boutique investment bank from Stockholm. Founded in 1999, Redeye cultivates investors through timeless knowledge, a humble attitude, and a strong focus on quality. Visit the website: https://www.redeye.se/Follow on Twitter: https://twitter.com/Redeye_—————————————————DisclaimerNotice that the content in this podcast is not, and shall not be construed as investment advice. This information is meant to be informative and for general purposes only. For full disclaimer, visit Redeye.se

Sean Iddings has built a strong pattern recognition from studying many of the world’s most successful companies and leaders. In our premiere episode, Sean shares his experience of investing’s holy grail - buying and holding a 100 bagger stock. We also talk about how to be an intelligent fanatic, dealing with biases, and why insider ownership might be overvalued.For the full notes with links to mentioned content, go to the episode page.—————————————————Chapters(00:19) Intro with Eddie and Niklas(03:23) Sean’s new business - becoming an intelligent fanatic(09:54) Heading to the Woodshedd(13:02) Finding the most fanatic teams(19:00) Leaders: Character > Ownership (25:09) Buying and holding a 100 bagger stock(43:36) Dealing with major drawdowns and biases(51:28) Finding your style and niche(1:01:59) The extraordinary ability to adapt(1:06:53) Intelligent fanatics of today(1:12:14) Sean’s book recommendations—————————————————Follow Sean Iddings on:The WoodsheddTwitter—————————————————What is Investing by the Books?Investing by the Books was founded by Henrik Andersson, Bo Börtemark, Mats Larsson and Michael Persson. It has published hundreds of book reviews in the past 10 years and operates on a non-profit basis. Visit the website: http://www.investingbythebooks.com/Follow on Twitter: https://twitter.com/Investbythebook—————————————————What is Redeye?Redeye is a research-centered boutique investment bank from Stockholm. Founded in 1999, Redeye cultivates investors through timeless knowledge, a humble attitude, and a strong focus on quality. Visit the website: https://www.redeye.se/Follow on Twitter: https://twitter.com/Redeye_—————————————————DisclaimerNotice that the content in this podcast is not, and shall not be construed as investment advice. This information is meant to be informative and for general purposes only. For full disclaimer, visit Redeye.se

Get to know our hosts Eddie Palmgren and Niklas Sävås, what you can learn from the show, and who the first podcast guests are.This recording is an interview conducted by Lars T Andersson at Redeye Growth Day, June 2, 2021.Books mentioned:Intelligent Fanatics Project: How Great Leaders Build Sustainable Businesses (Sean Iddings, Ian Cassel)Intelligent Fanatics: Standing on the Shoulders of Giants (Sean Iddings, Ian Cassel)The Rebel Allocator (Jacob Taylor)Dedicated: The Case for Commitment in an Age of Infinite Browsing (Pete Davis)——————————————————Welcome to Investing by the Books podcastOur podcast could be valuable if you:Want to improve as an investor and personWant inspiration for what to read next Struggle to read as much as you wantWant more insights from the authorsFor us, investing is a multidisciplinary art and craft. The content includes Behavioral Finance, Business, Economics, Equity Investing, Finance, and Surrounding Knowledge.——————————————————Who are the hosts and how to contact/follow?The hosts are:Eddie Palmgren, Editor and former Equity Analyst at RedeyeNiklas Sävås, Equity Analyst at Redeye and Writer at Investing by the BooksTo improve the podcast, we really appreciate your feedback, so please rate and review us! Do you have questions for our guests, book suggestions, or feedback? Twitter: https://twitter.com/IB_RedeyeEmail: ib.podcast@redeye.se——————————————————What is Investing by the Books?Investing by the Books was founded by Henrik Andersson, Bo Börtemark, Mats Larsson and Michael Persson. It has published hundreds of book reviews in the past 10 years and operates on a non-profit basis. Visit the website: http://www.investingbythebooks.com/Follow on Twitter: https://twitter.com/Investbythebook——————————————————What is Redeye?Redeye is a research-centered boutique investment bank from Stockholm. Founded in 1999, Redeye cultivates investors through timeless knowledge, a humble attitude, and a strong focus on quality. Visit the website: https://www.redeye.se/Follow on Twitter: https://twitter.com/Redeye_——————————————————DisclaimerNotice that the content in this podcast is not, and shall not be construed as investment advice. This information is meant to be informative and for general purposes only. For full disclaimer, visit Redeye.se