Sunday Briefing: On Disney, David Swenson, and investing religion

Sunday Briefing: On Disney, David Swenson, and investing religion

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Welcome to the Sunday Briefing newsletter where I share some of the interesting lessons in life, business, and investing that I’ve come across during the week.

Latest on Junto

One write-up was published on Junto during the week:

[Member Content] Disney: You’ve Got a Friend in Streaming.

A 7,500-word write-up of The Walt Disney Company. The gist of the analysis is that Disney must be valued in light of its huge digital transformation in which the contingent future of the fast-growing DTC business takes up the bulk of the intrinsic value (and current price). In order to value the company properly, a dive into the DTC unit economics is necessary.

What I’ve been reading

A conversation with David Swensen.

So for most of the 32 years that I’ve been at Yale, the standard assumption for endowment returns for the operating budget was 8 ¼ nominal. And that turned out to be a pretty decent working assumption. I think our 32-year rate of return is something like 13 ½, so we’ve generated a substantial cushion over the budgetary assumption for more than three decades.

Losing my religion.

I’d like to think I wasn’t a blind convert. I had, after all, looked at the data and listened to the experts. As far as I could tell, there was a consensus: Beating the markets is close to impossible. And there was a corollary: Active management is a sin.

Company of the week

The company of the week is Zillow Group Inc. Below, I’ve capitalized Zillow’s R&D expenses using a 6-year amortization schedule and the company’s advertising expenses using a 2-year amortization schedule. My rough valuation is $57 per share, but keep in mind that I haven’t dived much into the company.

Zillow stock valuation

Quote of the week

Michael Steinhardt on what matters in investing.

“I don’t think those people who have very special records in the stock markets are necessarily brighter or have more cerebral abilities than the next person. I think it’s a matter of competitive intensities, understanding one’s role, understanding it wasn’t a matter of building a business and having an organization but achieving the best return on your investors’ capital. It’s an internalized drive that’s both competitive and to some degree intellectual that combines all that with the ability to take risk and be comforted by risk. I used to kiddingly say, I liked to watch the moving parts and the moving parts were the stocks that went up and down.”

A thought

Studying history to make sense of the world is equally important when trying to make sense of a company. Study the company’s history, mark the key turning points, see how they affected the financials, add nuance and context, and build a narrative to your forecast.

Have a great coming week,
Oliver Sung

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