Sundheim: Companies facing secular decline almost never get acquired
Dan Sundheim · Dan Sundheim of D1 Capital on the art of public market investing · Oct 22, 2025 · at 38:39
Dan Sundheim, founder of D1 Capital, explains why short sellers facing terminal value declines do not need to worry about acquisition risk.
0:00 / 0:23exact quote · 23.9s
▶ Watch the full episode on YouTube → 720p mp4 · rendered on demand · StarZero watermark
“I find that, like generally, companies that have secularists almost never get bought. Like, I rarely has, do I ever see a CEO say, I want to go buy something that grows slower than I do, right? Like, this doesn't happen, right? Nobody wants, like, Take the time to do an acquisition that's going to, you know, invite a bunch of secular risk into their business.”
quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →
More from Dan Sundheim
Sundheim: Chinese tech firms avoided beating earnings to dodge scrutiny
“For a while we were seeing Chinese internet companies, like, they didn't want to beat earnings. Because if you beat earnings, your stock goes up too much. You know, you might be flagging that, like, you're over-earning”
Sundheim: Nvidia is not expensive and public AI stocks aren't in a bubble
“I would tell you, like, NVIDIA is, we can have a debate about what the earnings are going to be in a few years but it's not expensive.
Like, NVIDIA trades at twenty-something times multiple.
that's, you know, I think within reason, and I don't think there's…”
Sundheim: The biggest investing mistakes come from selling great compounders too early
“The biggest mistakes are selling the Costco's too early, because you know, the IRR is totally dependent upon what you assume the exit multiple is, like, and that is difficult to be precise about, you know, what the right exit multiple is for a business.”
Sundheim: Private market illiquidity is a huge benefit for holding great companies
“That's the nice thing about the private markets is that Once you invest, you can't sell, and usually for the best companies, that's a huge benefit ultimately.”
Sundheim: Hiring lateral portfolio managers from other funds almost never succeeds
“If I hire somebody laterally, who's a portfolio manager in another fund, that's rarely been successful, almost, almost never.”
Sundheim: Managing risk after a position moves destroys capital
“Risk management cannot happen after the fact. Like, anything you do after the fact is not risk management. It's actually just destroying capital. Risk management has to happen before the fact. Meaning, like, you size these positions so that, like, When it goes…”