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3 Stock Picks, the Case for Investing in Malaysia: Aaron Pek (Szn 5, Epsd 10)

Published April 25, 2023

This podcast episode brought to you by Covey — Covey is designed to find, reward, and train the next top investment managers —from any background—that anyone can copy, so everyone can win. To track a partial portfolio of Value Investing Substack, click here.

Aaron Pek of Value Investing Substack joins the podcast to discuss his bullish outlook on three individual stocks and more generally the investment case for Malaysia.

Content Highlights

  • First idea: Intel (INTC) and why it can compete with Samsung (SSNLF) and Taiwan Semiconductor (TSM) (2:33);
  • Some additional background on Intel and its business case (4:49);
  • Bears say INTC has years until it can catch up to TSMC, but Intel has the necessary machinery to bridge the gap sooner (10:10);
  • Second idea: Occidental Petroleum (OXY), a unique oil play beloved by Warren Buffett (15:23);
  • Background on the guest (23:57);
  • Third idea: Hibiscus Petroleum (HIPEF), whose management team the guest views as the Warren Buffett management team of southeast Asian oil and gas (28:13);
  • The case for Malaysia: a view from the ground (32:29);
  • There is an ETF, iShares MSCI Malaysia ETF (EWM) which tracks Malaysian stocks. Discussion of Malaysia’s geopolitical place between China and the US (34:39);
  • China’s lost decade (44:11).

Not investment advice! Do your own research, make your own decisions.

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Tech Is Not Dead, Though It Is Certainly Changing: Kevin Philip (Szn 5, Ep 8)

Published March 28, 2023

Kevin Philip of Bel Air Investment Advisors joins the podcast to discuss why he’s still bullish about technology despite seismic changes in that industry, his less enthusiastic take on cryptocurrencies, and other issues he’s watching — be they in the banking sector or geopolitically.

Content Highlights

  • Tech is not dreck, nor is it dead. Technological advances are at the heart of US economic growth. Demand for digital goods may have gotten ahead of its skis during Covid. It will return (1:40);
  • Chances for an interest cut by year-end have increased with the bank failures (4:30);
  • The employment situation is changing in the technology industry as it comes to terms with delicate circumstances around business models and the concept of value in general (6:01);
  • The bank failures may create opportunities for venture capital in two areas: secondary funds and a new vintage of funds that should generate outsize returns in the future (9:20);
  • Tech stocks have been beaten down, but lower interest rates can sustain earnings multiples. There are risks, however… (11:23);
  • Some of the threats and opportunities wrought by Chat GPT and AI (14:11);
  • When it comes to cryptocurrencies, the guest is not a major fan — and this was recorded before Binance (18:52);
  • Silicon Valley Bank was poorly managed and had a bad business model. It deserved to fail (21:52);
  • As for Credit Suisse, the Swiss bank appears to have been undone by a crisis of confidence (23:44);
  • Background on the guest (27:50);
  • Bel Air’s clientele is mostly about wealth protection rather than growth. What are some tried and true methods for accomplishing this? (32:25);
  • China discussion and why there’s no need to invest internationally (34:48);
  • Through it all, there are reasons for optimism (43:31).

Not investment advice.

For more information on the guest, visit the Bel Air Investment Advisors website.

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Discussing the Possible End of QT With One Who Worked at the Fed (Szn 5, Ep 7)

Published March 16, 2023

With Jake Schurmeier, Harbor Capital

Jake Schurmeier of Harbor Capital Management joins the podcast to discuss his experience at the Federal Reserve Bank of New York, which overlapped with a full monetary policy cycle, and what this may tell us about future Fed policy — especially in light of the events surrounding Silicon Valley Bank and Signature Bank of New York.

Content Highlights

  • The guest spent several years at the Federal Reserve Bank of New York’s open markets trading desk, where he was responsible for implementing monetary policy and monitoring the treasury market (3:41);
  • In this role he experienced the whole life cycle of quantitative tightening to quantitative easing, concluding with the liquidity injections that accompanied the Covid pandemic (5:13);
  • Chances are “pretty high” that the Fed reins in quantitative tightening, or QT, in light of the events around Silicon Valley Bank (SIVB) and Signature Bank of New York (SBNY). A lot of it depends on the uptake of the Bank Term Financing Program, or BTFP, the new lending facility (6:49);
  • Can these measures save the business model of regional banks? (10:26);
  • The possibility of moral hazard introduced by regulators (12:57);
  • Where does this leave interest rate policy? Fifty basis points is probably off the table, but a 25bps raise is certainly in the offing… (14:10)
  • In general, what kinds of catalysts will the Fed be looking for to shift from QT to QE? (16:20);
  • Was there ever any talk of negative interest rates? Did the Fed ever have discussions about buying stocks (21:00);
  • Background on the guest (25:33);
  • The Fed’s purchases of mortgage-backed securities was in retrospect unnecessary on the scale and duration with which it happened during Covid (28:24);
  • For a quasi-government organization, the Fed acts quite quickly. Faster than corporations. A look inside the Fed’s decision-making process (32:05);
  • Yes, Fed officials and employees are required to disclose their stock transactions (37:29).

Not investment advice.

For more information on the guest, visit HarborCapital.com.

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