Podcasts of the Week: the Blockchain, Wettlaufer & Miller

By Jack M. Forehand — 

With so many great investing podcasts out there, it can be difficult to identify the best ones. Through our new Podcasts of the Week segment, I will try to help filter out the most interesting episodes and identify the podcasts I learned the most from each week. In addition, we will also take a look at a great podcast from the past via the From the Archives section.

Best Episodes This Week

Hash Power – Invest Like the Best – 9/26/2017

I am late to the party on this one because this podcast has already generated a lot of buzz and has been shared many times on Twitter and elsewhere, but it is so good that I couldn’t do a summary of the best podcasts of the week without mentioning it.

Bitcoin and the Blockchain are some of the most discussed topics in the investment industry there days, but are also some of the least understood due to their complexity. Many people have been quick to form opinions, such as the popular one that all of this is a bubble, but most of those people are forming opinions without truly understanding what they are forming opinions on.

This audio documentary is the best thing I have seen so far that attempts to fix that by taking a look at the whole phenomenon from the ground up. The first episode focuses on what the blockchain is and why it is revolutionary. It is a very complex topic, but Patrick O’Shaughnessy has found some of the best thinkers in the area and combined their insights together to weave a picture of how all of this works and why it is important. The podcast is broken into chapters, and it starts with the concept behind the blockchain. As O’Shaughnessy  points out, this begins as a “high-minded” discussion with some of the most knowledgeable people in the space that discuss the philosophical reasons why decentralized ledger systems have come to exist and what the future might have in store for us using this new technology. Even though O’Shaughnessy says you can skip chapter two if you don’t want to get into the nitty-gritty details on the underlying  technology behind the blockchain, I found lots of value in that part as it helped me gain an understanding of the core characteristics of the technology.

I highly recommend that anyone who is interested in this area listen to this as a primer before doing their own research. This certainly is not a podcast to listen to at anything other than normal speed because of the complexity of the topic. I have listened to it twice now and still can’t say I totally understand everything, but it certainly has brought me far closer to an understanding of this very difficult concept. And like the Internet, the Blockchain and virtual currencies are likely going to change the world, and we are only in the first inning of that, so the earlier you can understand what is going on, the better.

Dale Wettlaufer – Super Investors – 9/26/2017

Dale Wettlaufer is the Chief Investment Officer of Charlotte Lane Capital, a long/short hedge fund and a professor at Columbia Business School. His approach to investing was very interesting me because he employs a value discipline, but doesn’t do it in a conventional way.

He worked at Legg Mason with Bill Miller and this podcast includes some interesting thoughts on Miller’s investment strategy. Like Miller, Wettlaufer doesn’t look at value as just buying cheap stocks with conventional metrics. His definition of value is an interesting one. He looks at it as “the net present value of all the cash an investor can take out of a corporation over its life.” Using that definition, value can involve buying conventionally cheap stocks, but it also can involve buying more expensive stocks if cash flows will grow in the future.

There is also some interesting discussion of position sizing and how both projections for upside for a position and the distribution of returns for any individual stock can play an important role in that. If you are a follower of value investing and want to learn some outside of the box ways to look at the discipline, this podcast offers a wealth of quality information.

From the Archives

Bill Miller – Masters in Business – 11/4/2016

What better to couple with an interview with a disciple of Bill Miller than an interview with Miller himself. This interview with Barry Ritholtz from last November was a great one. As a factor-based investor, I am always looking for interviews where a successful investor provides enough criteria to potentially build a model from it. Miller is someone who uses a lot of qualitative factors that can’t be modelled, but he also outlines some core fundamental factors used in his investment approach.

His criteria include the following:

  • A free cash flow yield above 10
  • Focusing on gross profit instead of earnings when valuing companies
  • A return on capital above a company’s cost of capital
  • Avoiding companies that have not met earnings expectations

There is so much more in this podcast, including some great insights into what Miller learned from the 2008 crisis and how asset based crises differ from liquidity based crises. Miller has produced a great long-term track record and this podcast is a great way to learn about how he did it.

If you would like a notification when future posts are released, you can follow me on twitter at @practicalquant.

Photo: Copyright: bryljaev / 123RF Stock Photo

Jack Forehand is Co-Founder and President at Validea Capital. He is also a partner at Validea.com and co-authored “The Guru Investor: How to Beat the Market Using History’s Best Investment Strategies”. Jack holds the Chartered Financial Analyst designation from the CFA Institute. Follow him on Twitter at @practicalquant.