Brian Christensen of Sands Capital discusses dominant market leaders in emerging markets.
Insight
A 90x P/E stock compounding at 45% remains an attractive investment
“If it's a 90 times PE company that's growing earnings only 10%, it's really hard to make the math work long term. But if it's a company that can compound earnings at 45% over the next five years, that can actually be very, very attractive. In an expected retur…”
Opinion
Tesla's valuation requires heavy speculation on autonomous and energy business adjacencies
“At this valuation, we think that you need much more than just car volumes, time, price, equal revenue, and earnings. You have to bake in a lot more for many of the adjacencies, including its autonomous fleet, and depending on where you are on those expectation…”
Insight
Sands Capital defines risk as business impairment, not market volatility
“The first type of risk that we're really trying to manage for is the impairment of the business relative to what we were modeling for that business over the next five years. So we call business impairment risk, and we call volatility risk. Volatility. We don't…”
Disclosure
Sands Capital holds five of the Magnificent Seven, excluding Apple and Tesla
“And at the firm wide level, we own five of the seven across our various different portfolios. But two of them, in this case, Apple and Tesla are companies that we have not embraced.”
Insight
Stock prices are predominantly driven by business earnings power over 5–7 years
“Really five to seven years is the minimum you need when the horse really starts pulling the cart, and so that's a fundamental sort of relationship that you have to believe in. Now, that doesn't mean you can completely ignore valuation, and valuation is One of …”
Insight
Shrinking public market investor time horizons create time-arbitrage opportunities
“The average time horizon for investors has shrunk rather than elongated. And I think that creates A time arbitrage opportunity, which essentially creates an inefficiency in the market.”