Insight
Morfit: The three fundamental ways to win in equity investing
“There's only three ways to win equity investing. One is you have better information or faster information and computer programs and fiber optic cables that you tunnel through railway Lines and stuff, and we don't do that. The second way is you understand the w…”
Insight
Morfit: Financial segment disclosures reflect internal bureaucracy, not true unit economics
“Financials are reported out as a function of the bureaucracy of the company, not necessarily as a function of the real economics of the business. So the segment disclosures you're getting are not necessarily the true economic picture, but if you're a good secu…”
Opinion
Morfit: Dot-com era Wall Street research relied on executive hero worship
“I looked around and I saw a system that was built on hero worship. Number one, we used to bring folks like Jeff Skilling of Enron in and have these big town hall meetings, and everybody would ooh and ah about how brilliant he was, and next in would be Hank Gre…”
Assertion Not checkable as stated
Morfit: Microsoft burned $4B to $6B annually chasing Apple and Google
“We could deduce that there was massive amounts of costs and losses being poured into these hardware initiatives. To the tune of four or five, six billion dollars a year that might be better spent driving Office three 65 in Azure instead of trying to chase the …”
Insight
Morfit: Public boards lack investment theses, leading to adjective-driven CEO searches
“A public company is sort of an evergreen institution, and the board members generally don't have an investment thesis almost all the time. They're chosen from outside that company's industry, so they have great Life stories and super impressive people and a gr…”
Disclosure
Morfit: ValueAct bought $60M of stock directly from Martha Stewart
“We got her to sell the only share she'd ever sold in our company, sixty million dollars to us, because we told her how scary it was to see all these scandals.”
Insight
Morfit: Companies with amazing cash flow tolerate poor decisions and cost bloat
“If you have a really amazing cashflow engine, It can tolerate poor decision-making, poor talent. You tend to see companies say yes to a lot of things because why not? To diversify a lot of peripheral activities that don't benefit the core, to not run their bus…”
Insight
Morfit: Shifting software capital allocation beats fixing industrial manufacturing costs
“It's easy to get a company to shift its allocations away from making Windows phones to focusing on Office three 65. Then the one we took on at Rolls Royce, which was how do we engineer your engines to have a lower cost of goods than what they currently have an…”
Assertion Supported
Morfit: Microsoft traded at eight times earnings in 2013
“So the PC legacy of the company was not what was going to take it forward, and the stock was trading at about eight times earnings.”
Assertion Supported
Morfit: Microsoft still uses ValueAct's executive compensation design
“I looked back at the Microsoft proxy this year, and I was really pleased to see that the basic architecture of what we designed over a decade ago is still in place.”
Disclosure
Morfit: ValueAct bought Roblox anticipating the shift to user-generated multiplayer gaming
“A little esoteric, but it relates to a few years later, we built a big position in Roblox because we understood the direction of travel of the video game industry was to massive multiplayer user generated communications and social dynamics into it.”
