Welcome back everyone. Today is going to be a continuation of last episode where we reviewed the portfolios of super investors. Only this time I think we even have a better slate. I honestly believe that this is a better group of super investors.
First of all, we have the full portfolio changes of Bill Ackman. So last time we had a preview, we got to see that he bought a lot of Uber and I went over the investment case of Uber. But this time we can see a lot of different trades he's making, trimming off Chipotle, trimming off Hilton. He is doing some interesting things with Nike. We're going to be looking at that. Then of course, we have Valley Forge Capital with none other than Dev Kantasaria.
He's personally my favorite. Dev, I believe is I think he's the best. He's my favorite. I'm a little biased, but I love his portfolio. I love his frame of thought. We're going to be at what he's doing, the trades that he's making. We have the Chuck Auchre portfolio. They bought a new company that I find really interesting and I've seen this company show up across a couple other super investors. As I've looked into it. I'm really impressed by this one. So we're going to be looking
through Chuck Auchre's trades. Then we have Warren Buffett in the Berkshire portfolio, we have Mark Massey with Alterock Partners, and we have Michael Bury. And we're going to be looking at all of these giving some context and insight. Now, we'll first kick things off with Bill Ackman. We already went over his publicly released at least news that he bought Uber and I think that's a great one. Like I've said many times, I think 9 out of 10 situations investors will make money on
Uber here. So I like the Uber buy, but Bill Ackman has a lot more going on with his portfolio in his 13 F filing. We get to see all the other companies that he's trading, he's buying and he's selling. Now one thing I'll point out that's important is that this website Data Roma only shows the US listed equities, so you don't see the international stocks, one of them being Universal Music Group. He owns the largest position in his portfolio as UMG. Blackman loves the licensing
style of business. Universal Music Group is like the landlord of the music industry. They charge licensing fees for anybody that uses their music and videos and movies and of course on companies like Spotify or Apple Music. Now in terms of his largest holding, which again, if it was here, it would be UMG right at the top here. So you can just imagine that. But in terms of his largest holding, I personally like Spotify more than UMGI, think it's more compelling and
interesting story. Spotify is often looked down on by investors because of the low margins and the questionable profitability. But what they've proven over the past year is that they can push up margins. They've done so the gross margins of the company, the operating margins have gone up over the past year. For example, if we look at the ratios of Spotify, the gross margins of only 30% are super low.
To put that in perspective, Booking Holdings has higher operating margins then Spotify has gross margins. So this is very low gross margins, but you can see them starting to take up a little bit year over year. In 2023, it was 25.6%. So they're actually increasing their gross margins, they're increasing their operating margins like crazy and of course their profit margins are following. So this company is getting a
nice return on capital employed. The numbers are moving in the right direction and the cash flows are following. If we look at Spotify's quarterly trailing free cash flow, you can see the nice story here. Explosive free cash flow growth as they're reducing their budget on things like podcasts. On top of that, one of the most compelling parts of Spotify is just the sheer number of people
using this application. When we look at the monthly active users, it's climbed up from 300 million, in fact below 300 million in only 2020. Fast forward five years, now there are 675,000,000 monthly active users. This is incredible worldwide organic growth. And you see this across the Premium and AD Tair, both of them growing like crazy. The AD Tair Works is a freemium
version. People join on, they use the AD Tair for a while, they fall in love with the product, then they upgrade to the Premium. Now again, Bill Ackman likes that licensing business of UMG, the company that owns all the
rights to all of this music. So there's two different stories here of the different relationships these companies have, but I'm on the side where I think Spotify will be a more compelling investment and I believe it's going to have better returns over the next 10 years than UMG, but we'll have to wait and see. Now, in terms of Bill Ackman's other investments, he holds Brookfield Corpus's largest position. He added a little bit to that one. I think it's great.
I like Bruce Flatt, I like Brookfield, I like what they're doing. He has one company that I, I can't get behind. I don't understand this one. It's Restaurant Brands International. This is the owner of Burger King. Burger King is a middle of the road fast food restaurant. It's right there with like Wendy's and a couple other fast food places. It's nothing exceptional. It's certainly no Chick-fil-A. It's not a nice sit down experience like Texas Roadhouse or Chili's.
It's just a fast food restaurant and I don't think it's even compelling as Chipotle, so I don't know why he owns it. On top of that, it's also ironic to me that Bill Ackman owns Restaurant Brands International as a huge concentrated position, a company that serves burgers and fries, while he also criticizes Coca-Cola and Pepsi for having addictive and
unhealthy products. He's continually on the RFK Junior train, saying that these companies have used advertising to get people to buy unhealthy foods. But then he owns Restaurant Brands International. So I don't understand this investment both from just an investment standpoint or from even his own philosophical standpoint of owning a company that goes contrary to his own
personal beliefs. I just don't believe this company fits in his portfolio and I'm waiting for Bill Ackman to dump it. So I think it both makes sense from an investment standpoint and from Bill Ackman's own moral objective against unhealthy foods to dump this company. And I think it's only a matter of time until he does it. The next one up is Chipotle. What you can defend is being quite a bit more healthy than Burger King. Either way, Chipotle is a large position, but he's continually
reducing this one. If we look over Chipotle since 2018, he's been overall a net seller. He has as in fact 1/4 where he added slightly to the position amongst dozens of quarters of selling it. So overall he's dumping this position. It makes sense why he's selling this one. There's simply better opportunities when Chipotle stock has pulled forward so much of its earnings. It trades at such a high valuation now that you have to grow substantially to justify today's valuation.
No changes on Howard Hughes Corp, no changes on Google. We have him adding a little bit to Nike and this needs some explanation. You see that he added to Nike last quarter, but that's not an accurate reflection of what's going on. Bill Ackman gave us an update in his most recent investor presentation that he actually sold all the equity in his Nike position, so he doesn't own any more Nike stock. Instead, he converted it to deep
in the money call options. So he took all the equity, sold it all, converted it to this position, and then he probably used a lot of that equity to enter into the Uber position. I believe that's the trade he's making. But the way that this works is because this website doesn't track any type of over the counter call options. It's going to show next quarter that he dumped his Nike position. So you're going to see that in
the 13 FS next quarter. It'll look like Bill Ackman completely sold out of his Nike stake. That's not really what happened. He's simply converting it to call options in his investor presentation. He says the new structure allows us to preserve the upside potential of owning the stock outright while unlocking capital to make new investments. Those new investments he made I believe was Uber. He also reduced his Hilton position and he added to Seaport Entertainment Group.
That's a very small 1% position. Overall, a very strong concentrated portfolio from Bill Ackman and I like the trades he's doing now. Next up we have my personal favorite, which is Dev Kantasari with Valley Forge Capital Management. He now manages over 4 1/2 billion dollars. He's grown his portfolio dramatically over the past 15 years and he's attracted more asset center management as he's shown incredible market being
performance. Now he's accomplished this through a group of highly concentrated investments into incredibly powerful monopolistic companies. In most cases, you'll see the commonalities here. They're monopolies or they're duopolies. They're tollbooth companies, meaning that they earn money off of the transactions or commerce of other businesses. He loves companies that have very high margins. They have high returns on tangible assets.
They don't require a great deal of capital expenditure or even marketing budget to grow. They have natural organic growth. They have a ton of operating leverage and scalability. All of these characteristics boil down to a very high quality company of which he makes these super concentrated bets in. And some of them have been phenomenal bets over the past decade, the most recent one being FICO. This one has dramatically outperformed the market and it's now a 34% position.
O Fico's by far his largest holding still. And even though he's had this incredible outperformance with FICO trading at a super high valuation, he has the discipline to continue holding and that's a very rare thing to see. Most investors would dump this position entirely if they had this type of out performance. He's doing these slight trims, just taking a little bit of gains to funnel into different companies, but he's not slashing the position down in size.
He's not reducing it as a huge percentage of his portfolio. He still likes FICO today, and in a recent podcast interview, he said that FICO deserved to trade up. It's now where it deserves to be. It got there rather quick, but it's a company that wholly deserves this momentum and trading. So I suspect he's going to continue to keep FICO as a large position in his portfolio in the future.
Now I can see that two of the companies he's added to are very similar here, S&P Global and Moody's. Both of these are talked about online as being overvalued companies. They trade at a high multiple. But here we have Dev Kantasaria adding to both of these positions. He increased S&P Global by 3%, even though it's already a 20% position.
So it's a massive outsized position and he's adding a bit more to it. Then we have Moody's, a 14% position and he added 2% to it. This is the complete counterintuitive thing to do. Instead of taking gains and using slogans like you can't go broke taking gains, Dev Cantosaria further concentrates into the winners. He feeds the flowers, he lets them grow even more. He adds more to these positions when they dip down. So I see a very disciplined investor here that continues to
follow his investing philosophy. Now one of the concerns here that I have and this is for a holding that I I currently own is right here with ASML. This is only a 2% position and he didn't add any to FML, even though FML has gone through a sell off. If we look at the trade history from Devcantasaria, he added to FML doubling his position in Q3 of 2024. So two quarters ago that was at around $850. The quarter ended at 8:33. So he was adding to the position when it was 850, but here we
have ASML today trading at 7:50. And even in last quarter when he could have added to it, it was trading at 6:50 and he didn't add any more to the position. The fact that he did not add to that position when it dipped down as much as it did makes me believe that he has his reservations about the company. He has some concerns about it. I believe that Dev Kantasaria is holding ASML as a smaller position because he believes it's not quite as predictable as required to become a larger
position. He puts a massive emphasis on predictability, and even though FML has a large Moat, it's a very wide Moat company. There are some concerns, specifically with international politics, with relationships with China, that could cause Dev to become a little bit less certain about the future predictability of the company.
Now that's just speculation, but I believe that's the case because otherwise, if he was 100% certain about the future predictability, he would have added more to this position. Instead, he chose to add to S&P Global and Moody's, which are not on as big of a dip as ASML. So this is one that I wouldn't be surprised. I'm not going to be shocked if he ends up selling out of ASML. If he becomes convinced that it's less predictable and it doesn't meet his high standards,
he'll dump the company. And if that's the case, I plan on doing my own assessment of the company and coming to my own conclusions. Even though I think Devcantasaria is incredibly smart, I really like what he does with his portfolio. That doesn't mean that they're always right, and sometimes super investors get things wrong. They get things wrong that I think are even somewhat obvious things in certain cases.
One example of a disagreement I had with Dev Kantasaria was his sell of Amazon. I thought he should have doubled down on the company, bought more of it, but he ended up selling out. He bought the company back in Q3 of 2021 when Amazon was trading for around 160. That was the reported price at the time. Then he ended up reducing the position in 2022 and selling completely out of it in Q1 of 2023. At the time, Amazon was below $100.00.
So he bought Amazon at a rather full price and then he sold it when it was off 50%. The company he bought with this money was Intuit. Since then, Intuit is up around 50%. So Intuit made a little bit of gains, but Amazon is up 150% from the sell price. What I ended up doing during the same time period, the very same quarter that he dumped his position in Amazon, is I bought more of the company. I bought it January 3rd of 2023 and I bought it again and again and again.
I bought over $15,000 of the stock doing a series of buys. This is at a share price of $85 per share. Now, I'm not pointing this out to say that that I'm better than Dev Kantasaria. I don't believe that's the case. But it's to say that you don't have to agree with everything these super investors do. In some cases, you can disagree and still be right. They make good decisions frequently, but they're not always right and they're not
infallible. So if Dev does end up dumping his ASML position in the future, I'll be making my own independent analysis on that. I won't just be following him with whatever he does now, as other trades he did here were interesting. He trimmed his into IT position by 10%, so minor trade there and then he bought Equifax and MSCI. These two companies both fit well within the Valley Forge Capital portfolio. We can start off with Equifax.
Most people understand Equifax is one of the credit bureaus where they collect your information and they sell that credit information for a small fee. So it fits within the portfolio of Devcantesario where he loves these type of credit companies. Think about it, he owns Moody's and S&P Global. They're both credit rating agencies. He owns FICO, which is a loan origination rating system, and then Equifax is now a credit Bureau, so he's investing all across the credit system.
But with Equifax, there's something that most people don't realize when first looking at this company is that the credit rating portion of the business is only around 40% of their total revenue. So it's less than half of the company. What is that other 5060%? That is the identity business. It's called the Workforce Solutions. The Workforce Solutions segment offers employment, income, criminal history, Social Security number verification services.
So it's basically know your customer information. When a business wants to be sure of who their customers are or who these people are. If they want to verify income, if they want to verify employment, if they want to know about this person for certain, they use this workforce solution. So most of Equifax is not a credit rating business, it's this workforce solution business. But what they're doing here is more of the same in selling data and analytics.
We have a number of different transitions going on with the company right now that's powering it for the future. The cloud transformation, Equifax has completed a significant transformation to cloud native environment. They're moving from on Prem to cloud. This is something that I've highlighted as a bull case for companies like AWS, Google Cloud and Azure. So you see Equifax doing this right now. We have data and analytics capabilities.
There's strong record growth. The company has shown significant record growth, adding 20 million active records in 2024. So the number of people that they're verifying is growing new strategic partnerships. They've signed 15 new strategic partnerships in 2024, including a notable partnership with Work Day. And then they're also rolling out a bunch of different products. So even though this is a small position, you get an idea of why it fits within his portfolio.
It goes right along with the other companies he owns. The other one that he recently introduced as a new position is the index business, which is MSCI. Now, MSCI is very similar to S&P Global's indices business. S&P Global owns the Dow Jones indices, which has indices like the S&P 500, the Dow Jones, it has things like SCHD. Those are all from the Dow Jones indices, but MSCI owns the world
indices. They're mostly outside of the US and as the rest of the world grows, this company naturally makes more money through their licensing agreement. This is another company that in terms of the finances, the way that this company set up, it fits well within the portfolio. They have very low expenses relative to the revenue of this company. It has almost no CapEx
expenditure. There's some sales and marketing and R&D, but that's been relatively flat as the company continues to grow revenue, which means they're sizing operating leverage, they're buying back shares, reducing the share count. The free cash flow consistently grows. In fact, it looks crazy consistent when you look at this free cash flow. Look at this trend over time. This is on a trailing 12 month basis, but that's 24% free cash flow growth.
Year over year, 24% free cash flow growth is impressive, but on a per share growth, it's growing 26% because remember they're buying back shares, increasing their per share growth. And in terms of dilution with stock based comp, you can see the purple bars there. It's almost nothing. It's a tiny fractional percentage, not enough to really factor in. So this is an undilutive fast growing, organically growing company. When we look at the revenue, the top line revenue grows at around 13%.
I like MSCI a lot. It's a company that I wouldn't mind owning. The only issue is every time I look to buy this company, I just believe I'd rather own a little bit more of S&P Global. So for me, it's one of those difficult positions. I could buy into MSCI, but I already feel like I got a good deal with S&P Global with a very similar business model. So overall, the Valley Forge Capital portfolio continues to be consistent, methodical.
They're executing their strategy exactly as they lay out. Next up, we have the Chuck Auchry portfolio. Chuck Auchry himself is a living legend. The guy's incredible. Unfortunately, he's not running this portfolio anymore. So we have we have the new leaders of the portfolio and they're trying their best to follow the same methodology and thought process. Overall, I think they're doing an OK job.
I don't like to see them sell out as some of their most iconic holdings that continue to be in a very good position. So I don't like the constant trimming of Moody's, a MasterCard. I just don't think it's necessary. These companies should just continue to compound for a very long period of time. But putting that aside, I do like and I at least I think it's interesting, some of the companies are buying, one of them being Costar Group Poland Capital bought.
This is a new position and we also have Chuck Ockery's portfolio adding to this position, one of the few companies they've added to well, what is Costar Group and why are these super investors buying it? Costar Group provides information, analytics and online marketplace services to commercial real estate, hospitality, residential and other related professional industries across the world. They also own a handful of websites that are very popular amongst the real estate industry.
All these different renter websites, all these different ones that connect different people to agents, they're in that business of owning and distributing data about the real estate industry. They also have a lot of compelling things moving forward with this company. We note here from Qualtrm that Costar holds a robust position in the commercial real estate sector with a noteworthy 93% renewal rate in subscriptions. 93 percent is insanely high. That is the same retention that Costco has.
That's higher than most subscriptions in the world. So this shows that this is almost like a business subscription. When somebody signs up, they view it as part of their industry, something that they need to have. When you're only losing 7% of customers per year, that's all you have to replace. That is a very, very sticky subscription.
Diverse revenue streams. The company manages a diverse set of product offerings across commercial, multi family residential markets and including successful platforms like apartments.com, Loopnet, which help mitigate risks associated with any single segment of their business. So even if real estate's doing poorly, they're going to be affected by that, but to a lesser extent than the real estate industry in and of itself. It's a bit how like S&P Global has Commodity Insights where
they price out commodities. That business in and of itself is not as volatile as the commodities themselves. So they're a little bit detached from the real estate industry themselves. They have proven growth. Costar has displayed consistent growth, achieving 54 consecutive quarters of double digit revenue growth. This trajectory speaks volumes about their ability to adapt, innovate and secure market leadership across various
segments. Now Qualtrum highlights that as one of the the benefits of this company and it truly is one of the most incredible things about this company. Let me bring up a chart here. This is the quarterly trailing 12 months, which smooths out the revenue over time. That looks pretty smooth, right? You don't see too many revenue charts that look like this. It almost looks fake, but these
numbers are real. That is one of the the smoothest trajectories ever, but that's on a trailing 12 month basis. Check out when I move it to quarterly, which typically is much more volatile across different companies, it's almost indistinguishable from quarterly. It looks almost just as smooth, not quite, but it's still incredible. I don't see charts like this
hardly ever. So it really is incredible what they're able to do. They just grow revenue consistently 10% year over year almost every single quarter without fail. And the reason that they can do that all comes back to this incredible metric here, I believe the most important one. They're 93% renewal rate.
Again, it's hard for me to overemphasize how incredible of a retention that is. If there's a company that has figured that out, whether it's Netflix or Duolingo or Costco, Spotify, if you can retain 93% of customers year over year, you only have to replace 7%, you have yourself an incredible business, hands down. That's enough right there for me to know it's an incredible business. The company is also widely popular.
So even though you probably haven't heard about this company in and of itself, the services they offer are super popular. The company's platforms including Costar and apartments.com, both strong user engagement metrics with average monthly unique visitors reaching 163 million. These figures are indicative of an effective brand awareness campaign and successfully marketing. Overall, Costar is an intriguing investment.
I like what I see here. When I look at the profitability, it's certainly gone down over the past year. And I think the reason that investors are now buying into the stock is they believe that if there's any type of resurgence in the real estate market, in the home market, that those numbers Will Rock it back up. And I think that's what they're planning on. FICO looks expensive today because home originations have
slowed down. People aren't buying and selling as much as they did 10 years ago. But if that picks back up because interest rates go down, Fico's going to do really well. And the same case can be made for Costar. It's another company that should benefit meaningfully if the real estate market heats back up. Overall, the Aqua portfolio's good. I like their new buys, but I wish they held on to their most powerful, dominant companies that they already own.
Now moving on, we have the king himself, the best investor to ever live, Warren Buffett. We can take a look at what's going on with Berkshire Hathaway. Let's go ahead and take a look at the biggest trades here. They reduce their position by 2% in Bank of America. This comes at surprise. They've been doing this for a few quarters. I think it's a good move. I think that they owned a lot of these banks. I don't think they're the best companies in the market.
So it makes sense that they're trimming their positions. They bought into Constellation Brands, that's the new holding. They increase their stake in the Domino's and Occidental Petroleum. We have them increasing SiriusXM, Verisign and Pool Corp over the last quarter as well. And then there's some cells and one of these could sting for some investors that went into this company, Ulta Beauty, they eliminated their position entirely.
This is not a lot of trading. Warren Buffett has mostly done nothing over the past year. And I think that in and of itself is instructive. It speaks a little bit to the market we're in. They do not believe that there's any dramatic deals in the market right now.
So while you see people on social media, people across the Internet buying stocks left and right, pushing prices up, pushing up PE ratios, now comparing stuff not even based on PE but on price to sales, they are justifying even more grossly overvalued companies, justifying narratives that are even more extreme and unpredictable. During all this market hysteria and speculation, Warren Buffett remains completely still. And this is what he does.
He waits until he sees value in the market that's so clear. There's such clear value that he's getting that he describes it as a caveman hitting him over the head with a club. You can't mistake it. You don't need to try to rationalize it with complex formulas. It's just such great value that it's unmistakable. And that's when he'll start buying again. But as of right now, you see what the Berkshire portfolio is
and it's not changing that much. Now moving on, we get to Mark Massey of Altarock Partners. They have $5 billion into a very concentrated portfolio of only four or five meaningful positions. Now, I'll be honest here, I do not like the trades that they made this quarter. I think they're counterproductive. I think that many of them will come back to bite them. For example, one of the companies that they sold the most of was FICO, which looking at their holdings, is one of
their strongest companies. So they're dumping their strongest companies because of valuation concerns. FICO traded up to a high PE ratio. They sold out of the stock, and hopefully they can buy something that will do better. But in most cases, I think that's counterproductive if you're already in the green by a large extent on a great company and the fundamentals remain intact as a very bright future. There's multiple tailwinds for FICO in the future. It'd be one that I would just
hang onto. I would maybe trim some of it like Dev Cantisario did, but still have it as a meaningful position. Instead, they sold out of it, and they also sold out of a lot of other companies, or at least they reduced their stake. They reduced their stake in Transdyme and Amazon and Microsoft and Moody's and MasterCard and Visa. It's fine to add to Google here. I think that's a great one. But overall, I think these trades are somewhat counterproductive.
They'd probably be better off just holding their positions. Now, finally, we got to see what Michael Bury has been up to. This is one that I always give of the disclaimer that I don't think he's a great investor to follow, to buy into his positions or sell out of them because he does things so rapidly. He changes his portfolio overnight. For example, in just the last quarter, here are the trades he made.
He sold 100% of shift 4. So he was in that company as a huge concentrated position, 16% of his portfolio, it's gone in a single quarter. It's just gone. So if you created a thesis around this company and you were invested in it because you saw Michael Bury buy it, now all of a sudden he's out of the company and you don't know exactly when he sold. You just know it was during last quarter. You'll see the same thing. He bought into Estee Lauder, Pinduoduo, he bought into
Chinese stock. So he's betting heavily on a Chinese stock recovery right now. Alibaba is his largest position. Baidu is his second largest, JD is his third. Those are three Chinese companies that makes up around 35 to 40% of his portfolio. But then we also have Estee Lauder, which has a bunch of exposure to China. It's heavily reliant on the
Chinese market recovering. So we can know directionally what Michael Bury's betting on. He's betting on the Chinese equities to recover over the next year. We don't know how long he'll stay in this trade, but that's how he's positioned right now. So there we had a look overall at the Super investors. And if you enjoyed this series, make sure you subscribe to the channel. I'll have more content out soon. That's all for now. See you in the next one.