It's a very nice explanation of the spawner risk/reward. Kudos. Really appreciate the efforts taken by you to explain in simple terms and making audience realize the value of it. This is the true value of being a subscriber of your TH-cam channel.
@@Value-Investing You once said Buffet should have sold coke in 4-5 years after a 4x return. What you said had a point. But in that case, does factors like Mid-cap, High ROIC and Spawners matter in such a short investment horizon. A high ROIC itself is a oxymoron to value as markets love high ROIC and its usually expensive. In the book The Acquirer's Multiple, it clearly explains Earnings yield is a better metric for value than ROIC.
I will have to rewatch the video to make sure I fully understand the nuances and what is a true spawner. The only companies that come to my mind are Salesforce, Corsair and Atlassian. But I will have to analyze them a bit better. 🧐 Thank you Sven!
WARNING: As the channel grows (thank you all for that), there are more and more scammers impersonating me. They are even commenting under each of my comment!! The only thing I am selling is my Research Platform and Book sven-carlin-research-platform.teachable.com/p/stock-market-research-platform All that I do, the real links to my content are in the description of the video, I don't give out my Whatsapp number and I don't sell any Cryptocurrency related things! BE CAREFUL OUT THERE!
One of my favourite companies is Magna International it's a car parts supplier , they're building whole cars for car companies and specialising in electric vehicles. Besides they have investing Portfolio which they are managing quite well.
Hello Sven. Could you please do an analysis about Shinoken? I saw the price went up a lot for the last week. I am not sure if there is enough margin of safety. Thank you!
I am also a subscriber to Mohnish Pabrais channel and he is pure signal , not TH-cam noise. People would be best served to just go watch all his videos
To me, except for adjacent spawners, they sound like a diworsification concept. Rushing into every hype proves many times to be a bad decision if a company does not think it can be the best at it in the end. The concept is really interesting, investing in compounders, but still its hard to be justified, especially for the small ones. Anyway, thanks for sharing!!! great video!!
The key isn't spawing but having the optionality. You can have 1 tool only but it can be applicable in multiple sectors, countries, b2b, b2g, b2c etc and so on. And that's preferably to me since it's way easier to build a moat around 1 core business. For me, one of such companies is Palantir. They have 3 main products (=lines of code) and it can be applied to any type or size of business
I’m more focused on individual owner/managers with great capital allocating ability and high inside ownership. Looking for similar situation to Buffett 50 years ago in the micro/nanocap market today.
Hi Sven, I found your chanel through your video with Daniel Pronk. Great content! I think Constellation Software and it's spin-offs are Kind of spawners
Lucid motors could be a spawner in the making. It produces batteries for the formule e race teams. Is starting to build luxury EV's and is looking into electric storage units etc.
Thanks Dr. Carlin. Reliance in India could be a copy cat spawner like MS - never the first but catch up and dominate many businesses, due to financial strength and focused execution
One interesting thing is also accounting for spawners. It seems many have what you have referred to as "hidden earnings" such as amazon. Monish Pabrai also said BABA PE is significantly lower than 20 when you look at hidden earnings. I barely know anything about accounting other than the basics but how can we arrive at hidden earnings? Assume a fraction of Capex is also earnings?
I know Tesla's valuation is not a "value bet" at this point but of all companies I'd explore Tesla as a spawner company . They are innovating at an incredible pace and are at the early stages of infiltrating several product categories
Hi Sven, Great video, as always :). A suggestion for a spawner could perhaps be Reliance Industries from India? You may or may not have heard of them but they've definitely developed new businesses over the years. Thanks!
I'm reading in Common Stocks and Uncommon profits by Philip Fisher and Point 2 out of the 15 sure sounds a lot like "look out for spawners" although he obviously didn't use that word. But he mentions both companies focussed on adjacent products within the same market as well as new products in new markets. And Du Pont who used to make blasting powder, developing nylon in their r&d is an example he brings up a bit earlier. The examples are a bit antiquated, but it sounds like he was looking for similar things in companies (but not just the spawning alone).
Sven, Apex spawners approach is contradictory to what you said in Buffet's Coca Cola investment. You said he should have sold at a 4x and moved on. I personally think, traditional value investing works with small sums but once you achieved destination goal, its best to stick with Munger approach of buy and hold businesses with longevity.
I'm thinking Sony may be a potential spawner. Alongside the core business, they have many smaller ventures with a lot of potential upside - sensors for self driving cars, an AI company, a biotech company, a AI-centeted real estate company in Japan, a stake in a fast growing medical company called M3, stakes in some other companies... there's a lot. I'll make my case in an email soon! Thanks for the great content as always Sven.
i balance my portfolio at my age 64 , i m 55% in cash 28% dividend paying blue chips , 12 % emerging markets and small caps 5 % pre IPO s ,crypto s ,exploration companies, i rebalance monthly , so when my crypto s went 4x in 3 months i withdrew my capital + a profit to rebalance so i now have risk free return
I think one example of spawner is Leonardo (LDO), Italian company focused of aerospace. It just acquired few interesting businesses. What do you think?
Terry Smith had a similar comment on why he didn't like Alphabet: their ROIC isn't great, largely because they're spending tons of money on acquiring or starting non profitable businesses. Still, as you mentioned, it only requires one AWS idea...
Hi Sven, not sure if this could be applied for mining giants like BHP who are, from time to time bit on the controversial side when it comes to developments, acquisitions and mining jurisdictions but definitely on the growth perspective it could be a fit as a spawner. Seems bigger miners keep buying out the real prospective smaller ones, creating ever bigger companies.
Proterra, prta. It’s doing refitting old commercial vehicles for electrification, building it’s own ev buses, building battery solutions, and building battery infrastructure for the past 10 years
Keep in mind, all their breakthroughs can be diminished by generic drugs. There are 2 companies in Argentina already planning to release the generic of the latest vertex drug
Hey Sven, I would think that Disney is an apex spawner as they do adjacent spawning by creating things like Disney+ or the Disney Channel etc. and embryonic spawning through acquisitions like Marvel, 21st Century Fox, etc. I don't know if they do any cloning per se but definitely non adjacent spawning through the form of Disneyland Parks.
Thank you Sven. You’ve systematised the spawner framework nicely. I’ll be sure to let you know any I come across. What quantitative metrics indicate a business is a spawner? 25%+ median ROE for 5-10+ years? Conversely have you found any metrics that indicate a business might be a fake spawner?
Didn’t read all the comments and maybe it was already mentioned elsewhere, but Chris Mayer (Woodlock House) owns the following companies of which at least the first two are spawners: - Constellation Software - Topicus - Evolution Gaming - Heico
Thanks, Sven. Great video. I was wondering why none of these spawners is in your portfolio, except for Alibaba? I know you cannot own every good thing but just curious is that because they are too expensive (or over-valued?) or there are other reasons? Would it be a good idea to invest in (some of) them as a value investor? By the way, it would be nice to see an analysis of NVDA as well.
none why? too much froth amzn is supposedly a deal at 75+X earnings, meanwhile im getting 8p/e with Ally bank and its growth prospects look very good as well. might be a spawner when it grows, best time to buy amazon was when it was small yet you value investors buy amazon after it has turned into a big a$$ whale and now targeted worldwide for its blubber.
@@Value-Investing Haha. Well, that's kinda my expectation with this sort of portfolio: 1-2 out of 10 will do awesome (at least 10x in 10 yrs), a few will do ok, and probably half will do poorly or even disappear. Great content, as always (long-time subscriber here). Greetings from Romania!
Ok Sven, spawning is a concept pro diversification which we know sometimes degenerates into diworstification. How spawning would be seen from the eyes of Peter Lynch in your opinion? Also, by supporting spawners, aren't you just admitting that diversification is better than concentration? Thank you as always
good questions - I think it becomes more an issue of concentration - keep in mind maybe only a handful do it well over a decade! Much noise to be filtered out!
Diversification works and spawners are potentially a proof for that. Especially when we talk about high growth. On average lynch probably didn't hold significantly less positions than google "spawns" companies I'd say. I could be wrong though. Also keep in mind that most of the time, a spawner's offspring is born into an ecosystem in which they thrive and benefit from network effects. We'd speak of diworesification if google enters copper mining or starts a burger franchise but not if Amazon enters food delivery right?
Massive undervalued spawner could be Evonik Industries: -Leading in the manufacturing of 3d-printing materials. -Leading in mrna delivery-system. One of the leading companys in the field of nutritions for farm animals, for e.g. salmon breeding. - making materials for the medicine, healthcare, cosmetics and automotive industry. - having patents for battery additives ( for e.g. a powder what makes batterys more efficient. -Heavily invested in Biotech Start ups -Heavily invested in China - very good selection of aqusitions in the past 5 years To name just a few things of it.
One thing that gets lost is that Pabrai puts an emphasis on companies with low market cap (no more than 5b to 50b, if I recall correctly) . Otherwise it will be very difficult to grow 10x or 100x. All the spawners mentioned in the video are great companies, but it would be very rare that investing in AMZN, FB, MSFT, BABA, GOOGL, etc would make 10x or more at these prices in the next 10/15 years.
Seems like the line between spawner and chronic deworsifier could be a fine one, unless I'm missing something. I find it hard to see how previous success in spawning a disruptive or innovative business can predict future success in doing so, unless we're really just evaluating management prowess, IP, competitive moat, etc. and then we're just back to growth investing. Are we looking for a particular sort of business structure?
Slightly unrelated comment - are you still able to view the full key rations in Morningstar? I am not longer seeing the option to expand all the statistics.
Hi Sven question for you, will you be doing a video of how to calculate intrinsic value. If not do you know any place to go that has reliable information that can teach the average person like me. Grazie mile for the content
I believe that Palantir will become a spawner in the coming years. They're beginning to invest heavily in start up companies. As well, I could see them spinning off their software platforms into stand alone businesses as they grow.
Hi Sven, can you do a video about Shinoken, it seems like a great spawners, however I don't know if it Apex and really need your expertise to dig into this real estate sector
I believe Zoom is a future spawner as they started from videochatting to now empowering artist(virtual live shows) to a marketplace for developers building Zoom related apps(ZAPPS). I am confident something good will arise. Also Bytedance is a Spawner, sadly no one can invest in it.
Would you say most traditional holding companies that try and stimulate the companies they own in their portfolio, are also spawners? I saw you have Berkshire on the list. In that case I would suggest a Belgian holding company, Ackermans & Van Haaren. They have a lot of companies under their umbrella, from a big construction and dredging company (not a lot of them on the stock market), to banks, real estate and biotech. The Belgian stock exchange has a lot of similar companies (Brederode, GIMV, Sofina, etc.). Personally I think these companies (like Berkshire) are extremely difficult to understand and valuate as it's hard to valuate all the separate pieces to the company.
Spawners aka (tech) growth stocks or conglomerates that make successful mergers. Hindsight is wonderful! I'm not a huge fan of that book (Richer Wiser Happier) he seems to have largely copied Market Wizards, and a lot of the stories seem to be of people who got rich off Amazon. Nethertheless, I enjoyed your video as always :)
thanks - I like your point - I am always looking to improve and learn new things - in my case the framework just comes on top of value, so just as a bonus!
I pretty liked to read the book. But I liked the chapters about Value the most although they were a little bit repetitive. But I fully get your point. The Stories, especially later in the Book, about buying just Amazon and Bitcoin or only Amazon or Alphabet seemed to me include a strong survivorship bias. Very interesting would be how much people had the same Framework but only 2-3 other Stocks. In Addition I truly can't unterstand the spawner Framework from a risk and reward perspective like Sven desribed in a video (100 bagger) earlier. In my opinion too much risk (especially bad returns) for a very little chance of pretty exuberant returns. Therefore I stay with Kahn (and Sven of course): Risk first! Maybe it is possible to add this strategy on top of Value. For Example: Lets say Alibaba is 50% undervalued (hypothetic). In this case it would has a big margin of safety (value). The Price goes up to the fair price. You sell half of your position and take your starting capital out and just let the rest run for free. If it will be later a 10x-100x, fine, if it goes bankrupt you have no return but didnt lost any origin capital. Question is if you have gotten better if you had invest the whole sum for another 2x and so on?
Hi Sven. Been following you for years but I'm confused about one thing: How do you realize on a 10 bagger if you sell most value stocks once they reach fair value? (like disney recently? thanks!
You don’t sell when a stock reaches “fair value” you only sell once the price has become too exuberant compared to the future run way, future prospects of the company. This however is very subjective and is the reason investing is so difficult.
@@ultramarineization kind of but your not betting on future expectations your looking at what’s probable. Like for example Tesla at its highest market cap would have had to do some crazy thing in the future in order to achieve the grow expectations, in that situation you would sell because the stock price has become to exuberant for what is probable in the future. Another thing to add here is your “ fair value” is not pin point it’s more of a grey area where you look to see if the price is way below this area(buy) way above this area (sell). You are not looking at a stock saying I think it’s should be £83 and it’s £80 I’m buying and waiting for it to get to £83 and then selling.
And what is actually behind the success of such spawners is their 1 main business that is basically a monopoly or at least has a crazy moat (like Google advertising). That's what we need to be looking for - the ability to produce juicy cash in the long-term, only with this achieved companies can brench out or acquire other divisions
Thanks for the video. Are you sure Tencent still owns 5% os Tesla? do you know where can I find a summary of Tencent holdings and percentages? I did not find it on their website. Thanks a lot great video!
@@Value-Investing I mean, there is some information in Wikipedia…but who knows if it is still valid…I wonder if this kind of things shouldn’t be reported in the quarterly reports….
Regarding Google, I started buying Google a bit late (in 2018), I really like the type of innovation they do and they really go for cutting edge and global life changing investments. I think it's possible for them to x4 is the long term. I've often found that I am an early adopter of technology, but I didn't extrapolate that into others that will follow for the coming decade - Googles platforms are all the biggest AND best within their area. They have like 70% to 80% market share with TH-cam, Google Search, Maps, Chrome, Android and more platforms. People might see this as a bad thing that they already have so much market share, but I see it as an opportunity to always expand and add new features to their ecosystems that you want to buy and since I've started subscribing to their services - which I believe is still quite early compared to the decades to come it will be even more significant. I believe users will feel compelled to stay within their ecosystem just like Apple users (without the pseudo forced to stay). If Alphabet can start to capitalize on hardware to a bigger extent like Apple have done then I see great value added for shareholders. On top of that they do impressive research within fields like AI, quantum computing etc. Basically no debt and more than $100 billion in cash, so they are ready to expand. On the flip side - they are very big and the valuation is high.
Companies who spawn unrelated businesses feel like business deworsification. I think that companies who spawn complementary businesses ( spawns that relate to the core business ) are the better investments.
Hi Sven , i would like to know in Swizterlamd SIX exchange stocks will ha corporate actions like BONUS/Split SHARES? For the stocks . Heance i am from India and i am interested in Swiss SIX exchange but i checked a lot about it but not found enough Data ,please share if possible a view video
To find new spawners that possibly 10-100x, it is the best way to find in the small cap? due to most large cap companies already more than 1Billion market Cap
The real spawner was this video that no one expected and everyone loved. Thanks Sven! Sending love from California!
thank you!
The last 10 years I was an extreme Value investor. P/E
I love you Sven. Great content. Informative. Well produced. And as always a merry attitude.
Glad you enjoy it!
Applause - it just gets better and better - thank you. Well done. Very useful this
Glad it was helpful!
Thanks for your contribution to the investing community.
my pleasure!
Wow guys - this is such great content ... thank you Sven!
Glad you enjoyed it!
I never heard of the term spawner before. Great video as always Sven!
Thanks! 😃
Much appreciated, I find great value in your videos. Thanks for the clear explanations.
thanks!
Wow, amazing video that opened my mind! Thank you!
Glad it was helpful!
Thanks for the great video!! we are always getting value from the videos.
I will put in the list:
Xiaomi and Ping An
thanks, will put them onthe list!
It's a very nice explanation of the spawner risk/reward.
Kudos. Really appreciate the efforts taken by you to explain in simple terms and making audience realize the value of it.
This is the true value of being a subscriber of your TH-cam channel.
So nice of you
@@Value-Investing You once said Buffet should have sold coke in 4-5 years after a 4x return. What you said had a point. But in that case, does factors like Mid-cap, High ROIC and Spawners matter in such a short investment horizon. A high ROIC itself is a oxymoron to value as markets love high ROIC and its usually expensive. In the book The Acquirer's Multiple, it clearly explains Earnings yield is a better metric for value than ROIC.
I am a simple person, I see Sven in my notification, I click, I like.
Thank you Leonardo!
me too
Monkey see Monkey do 🙃
Congratulations to 178.000 subscribers, Sven!
Thanks! 😃
Thank you. This video expanded my single focus of investing, exponentially.
great to hear!
I will have to rewatch the video to make sure I fully understand the nuances and what is a true spawner. The only companies that come to my mind are Salesforce, Corsair and Atlassian. But I will have to analyze them a bit better. 🧐
Thank you Sven!
thanks for sharing!
Great Content Sven! Thanks for your research ;-)
My pleasure!
Great Video. Keep it UP
Thank you!
great content..thanks
happy to hear that!
WARNING: As the channel grows (thank you all for that), there are more and more scammers impersonating me. They are even commenting under each of my comment!! The only thing I am selling is my Research Platform and Book sven-carlin-research-platform.teachable.com/p/stock-market-research-platform
All that I do, the real links to my content are in the description of the video, I don't give out my Whatsapp number and I don't sell any Cryptocurrency related things! BE CAREFUL OUT THERE!
The first investor who tells the truth how to invest and what to pay attention to. I am from POLAND AND THANK YOU VERY MUCH
thanks!
Thanks. Excellent analysis
Thank you!
One of my favourite companies is Magna International it's a car parts supplier , they're building whole cars for car companies and specialising in electric vehicles. Besides they have investing Portfolio which they are managing quite well.
thanks for sharing!
Just learned a new English word “spawner” 😅 in Dutch “ontkiemen or spruiten” thank you for explaining.
bedankt!
Thank you!
You're welcome!
Hello Sven. Could you please do an analysis about Shinoken? I saw the price went up a lot for the last week. I am not sure if there is enough margin of safety. Thank you!
I am also a subscriber to Mohnish Pabrais channel and he is pure signal , not TH-cam noise. People would be best served to just go watch all his videos
nice videos!
Best Channel on TH-cam
Thanks Chris!
Great video 👍
Thanks 👍
To me, except for adjacent spawners, they sound like a diworsification concept. Rushing into every hype proves many times to be a bad decision if a company does not think it can be the best at it in the end.
The concept is really interesting, investing in compounders, but still its hard to be justified, especially for the small ones.
Anyway, thanks for sharing!!! great video!!
you only need one in 5 years, so you have the time to be sure it actually is!
The key isn't spawing but having the optionality. You can have 1 tool only but it can be applicable in multiple sectors, countries, b2b, b2g, b2c etc and so on. And that's preferably to me since it's way easier to build a moat around 1 core business.
For me, one of such companies is Palantir. They have 3 main products (=lines of code) and it can be applied to any type or size of business
thanks for sharing!
I’m more focused on individual owner/managers with great capital allocating ability and high inside ownership. Looking for similar situation to Buffett 50 years ago in the micro/nanocap market today.
when you find something, please send me an email!
Send me an email if you found it haha santiago.despo@gmail.com
Very nice Sven
Many thanks!
It would be great if there was a section talking about spawner vs. conglomerate.
this is the video / think a little bit
Hi Sven, I found your chanel through your video with Daniel Pronk. Great content! I think Constellation Software and it's spin-offs are Kind of spawners
Lucid motors could be a spawner in the making. It produces batteries for the formule e race teams. Is starting to build luxury EV's and is looking into electric storage units etc.
thanks for sharing!
Thanks Dr. Carlin. Reliance in India could be a copy cat spawner like MS - never the first but catch up and dominate many businesses, due to financial strength and focused execution
thanks for sharing!
Hi Sven, I think NVDA could become a spawner, but the valuation now is a little crazy. The managment and products are great
thanks for sharing!
One interesting thing is also accounting for spawners. It seems many have what you have referred to as "hidden earnings" such as amazon. Monish Pabrai also said BABA PE is significantly lower than 20 when you look at hidden earnings.
I barely know anything about accounting other than the basics but how can we arrive at hidden earnings? Assume a fraction of Capex is also earnings?
absolutely!, great point!
I know Tesla's valuation is not a "value bet" at this point but of all companies I'd explore Tesla as a spawner company . They are innovating at an incredible pace and are at the early stages of infiltrating several product categories
yes, Tesla is a spawner for sure!
Hi Sven,
Great video, as always :). A suggestion for a spawner could perhaps be Reliance Industries from India? You may or may not have heard of them but they've definitely developed new businesses over the years.
Thanks!
interesting idea, but they are really big, more a conglomerate than a spawner
I like his approach and Also if you are into more indian Investors find the name "saurabh mukherjea".
thanks for sharing!
Would love an update on your thoughts graftech one of these days. Dont think it would get a ton of views though.
I didn't really like them back then, so no point in looking back!
There is a fine line between spawning and diworseification.
very fine one, but that is why we focus on real spawners and are happy with only one per year!
I'm reading in Common Stocks and Uncommon profits by Philip Fisher and Point 2 out of the 15 sure sounds a lot like "look out for spawners" although he obviously didn't use that word. But he mentions both companies focussed on adjacent products within the same market as well as new products in new markets. And Du Pont who used to make blasting powder, developing nylon in their r&d is an example he brings up a bit earlier. The examples are a bit antiquated, but it sounds like he was looking for similar things in companies (but not just the spawning alone).
that is a great book too!
Another (maybe obvious) important Pabrai's strategy - clone great strategies (and great investors)
from my TH-cam Studio: regular viewers watch this video less - so not that obvious!
Sven, Apex spawners approach is contradictory to what you said in Buffet's Coca Cola investment. You said he should have sold at a 4x and moved on. I personally think, traditional value investing works with small sums but once you achieved destination goal, its best to stick with Munger approach of buy and hold businesses with longevity.
I'm thinking Sony may be a potential spawner. Alongside the core business, they have many smaller ventures with a lot of potential upside - sensors for self driving cars, an AI company, a biotech company, a AI-centeted real estate company in Japan, a stake in a fast growing medical company called M3, stakes in some other companies... there's a lot. I'll make my case in an email soon! Thanks for the great content as always Sven.
thanks, looking forward to it!
Hi Sven . ZEPP health looks like it has potential to be a spawner - currently only valued as a hardware manufacturer
thanks for sharing!
My whole portfolio consist of spawners
(AMZN,FB,BIDU,TCEHY,BABA) 😅
thanks for sharing!
I believe in diversified company’s (spawners) rather than diversification in portfolio 😀
Bro are you in India? How did you buy these especially tencent
@Maneesh …. No bro, I am in Canada, Buying these stocks on US exchange
i balance my portfolio at my age 64 , i m 55% in cash 28% dividend paying blue chips , 12 % emerging markets and small caps 5 % pre IPO s ,crypto s ,exploration companies, i rebalance monthly , so when my crypto s went 4x in 3 months i withdrew my capital + a profit to rebalance so i now have risk free return
I think one example of spawner is Leonardo (LDO), Italian company focused of aerospace. It just acquired few interesting businesses. What do you think?
have not analyzed yet, so no opinion!
Terry Smith had a similar comment on why he didn't like Alphabet: their ROIC isn't great, largely because they're spending tons of money on acquiring or starting non profitable businesses.
Still, as you mentioned, it only requires one AWS idea...
yep, only one!
Hi Sven, not sure if this could be applied for mining giants like BHP who are, from time to time bit on the controversial side when it comes to developments, acquisitions and mining jurisdictions but definitely on the growth perspective it could be a fit as a spawner. Seems bigger miners keep buying out the real prospective smaller ones, creating ever bigger companies.
interesting perspective!
Hi Sven! LVMH is my ultimate spawner that you should consider looking into.
thanks for suggesting!
A very close second, daaamnn.....
Thanks for commenting!
Proterra, prta. It’s doing refitting old commercial vehicles for electrification, building it’s own ev buses, building battery solutions, and building battery infrastructure for the past 10 years
thanks for suggestinG!
Interactive Media - $IAC is a spawner. Also Netflix looks like they are in the beginning to expand into completely new areas like gaming.
thanks!!!
I believe Regeneron and Vertex to become spawners in the gene editing space. They are also solid value investments I believe.
thanks for sharing!
Keep in mind, all their breakthroughs can be diminished by generic drugs. There are 2 companies in Argentina already planning to release the generic of the latest vertex drug
@@khlebasmike What do you mean?
All drugs can be replaced by generics, that's why they have patents.
And how does that diminish their breakthroughs?
Hey Sven, I would think that Disney is an apex spawner as they do adjacent spawning by creating things like Disney+ or the Disney Channel etc. and embryonic spawning through acquisitions like Marvel, 21st Century Fox, etc. I don't know if they do any cloning per se but definitely non adjacent spawning through the form of Disneyland Parks.
very interesting, thanks!
That’s interesting, never looked at Disney that way but it has some Merit, I’m invested with Disney but just didn’t think of it the way you said it
Thank you Sven. You’ve systematised the spawner framework nicely. I’ll be sure to let you know any I come across.
What quantitative metrics indicate a business is a spawner? 25%+ median ROE for 5-10+ years? Conversely have you found any metrics that indicate a business might be a fake spawner?
metrics unfortunately no:-( It is more about knowing the business well, will go through my list soon!
Didn’t read all the comments and maybe it was already mentioned elsewhere, but Chris Mayer (Woodlock House) owns the following companies of which at least the first two are spawners:
- Constellation Software
- Topicus
- Evolution Gaming
- Heico
thanks for sharing
Thanks, Sven. Great video. I was wondering why none of these spawners is in your portfolio, except for Alibaba? I know you cannot own every good thing but just curious is that because they are too expensive (or over-valued?) or there are other reasons? Would it be a good idea to invest in (some of) them as a value investor? By the way, it would be nice to see an analysis of NVDA as well.
th-cam.com/video/1ZceWi0ihSw/w-d-xo.html
Hey everyone! Let’s hear you spawner picks from around the world with ADR listings for Americans to purchase
US-Amazon
China- alibaba
Western Europe- ?
Eastern Europe - ?
Middle East - alibaba?
Central/South America -?
Africa? Let’s hit the jackpot here
let's hope the comments are interesting!
India -? HDFC bank
@@ethanolson2591 Jumia for africa
none why? too much froth amzn is supposedly a deal at 75+X earnings, meanwhile im getting 8p/e with Ally bank and its growth prospects look very good as well. might be a spawner when it grows, best time to buy amazon was when it was small yet you value investors buy amazon after it has turned into a big a$$ whale and now targeted worldwide for its blubber.
The best Spawner I know of right now is Victory Square Technologies. it is trading for a deep discount at 0.25 PB and 2 PE
thanks for sharing
@@Value-Investing my pleasure. thanks for explaining spawners :D
I think the five Japanese companies Berkshire Hathaway invested in are also Spawners themselves: Mitsubishi, Mitsui, Sumitomo, Itochu, Marubeni.
thanks for sharing!
Do you know when Berk invested in these? Thanks!
Sven, it would be great if you created a 'Spawner portfolio' on your research platform
lets start with a list, from there we will source for the Large portfolio - so you might actually get it!
@@Value-Investing 😁😄
Here are a few to consider imo (I already own them):
Nvidia
Shopify
Salesforce
Sea
Square
Sofi
Mercado Libre
Etsy
Palantir
thanks for sharing! Spawning is about finding on in 5 years, and you give us 9 :-))
@@Value-Investing Haha.
Well, that's kinda my expectation with this sort of portfolio: 1-2 out of 10 will do awesome (at least 10x in 10 yrs), a few will do ok, and probably half will do poorly or even disappear.
Great content, as always (long-time subscriber here). Greetings from Romania!
Ok Sven, spawning is a concept pro diversification which we know sometimes degenerates into diworstification. How spawning would be seen from the eyes of Peter Lynch in your opinion? Also, by supporting spawners, aren't you just admitting that diversification is better than concentration? Thank you as always
good questions - I think it becomes more an issue of concentration - keep in mind maybe only a handful do it well over a decade! Much noise to be filtered out!
Diversification works and spawners are potentially a proof for that. Especially when we talk about high growth. On average lynch probably didn't hold significantly less positions than google "spawns" companies I'd say. I could be wrong though. Also keep in mind that most of the time, a spawner's offspring is born into an ecosystem in which they thrive and benefit from network effects. We'd speak of diworesification if google enters copper mining or starts a burger franchise but not if Amazon enters food delivery right?
Massive undervalued spawner could be Evonik Industries:
-Leading in the manufacturing of 3d-printing materials.
-Leading in mrna delivery-system.
One of the leading companys in the field of nutritions for farm animals, for e.g. salmon breeding.
- making materials for the medicine, healthcare, cosmetics and automotive industry.
- having patents for battery additives ( for e.g. a powder what makes batterys more efficient.
-Heavily invested in Biotech Start ups -Heavily invested in China
- very good selection of aqusitions in the past 5 years
To name just a few things of it.
thanks for sharing, added to the list!
Hi Sven. What do you thinks about Shift Technologies? Could be a disruptive company in a old business?
have not analyzed!
One thing that gets lost is that Pabrai puts an emphasis on companies with low market cap (no more than 5b to 50b, if I recall correctly) . Otherwise it will be very difficult to grow 10x or 100x. All the spawners mentioned in the video are great companies, but it would be very rare that investing in AMZN, FB, MSFT, BABA, GOOGL, etc would make 10x or more at these prices in the next 10/15 years.
absolutely!
Sven mentioned this in the video though. This comment is a year old but at the current price i could see Alibaba 10x.
Seems like the line between spawner and chronic deworsifier could be a fine one, unless I'm missing something. I find it hard to see how previous success in spawning a disruptive or innovative business can predict future success in doing so, unless we're really just evaluating management prowess, IP, competitive moat, etc. and then we're just back to growth investing. Are we looking for a particular sort of business structure?
we are looking for one business in a decade - keep that in mind when thinking about it
Slightly unrelated comment - are you still able to view the full key rations in Morningstar? I am not longer seeing the option to expand all the statistics.
log in:-)
Hi Sven question for you, will you be doing a video of how to calculate intrinsic value.
If not do you know any place to go that has reliable information that can teach the average person like me.
Grazie mile for the content
here you go: th-cam.com/video/TP-DfIHLb50/w-d-xo.html
I believe that Palantir will become a spawner in the coming years. They're beginning to invest heavily in start up companies. As well, I could see them spinning off their software platforms into stand alone businesses as they grow.
thanks for sharing!
I Think so too. Startet a small position of 100 shares.
Hi Sven, can you do a video about Shinoken, it seems like a great spawners, however I don't know if it Apex and really need your expertise to dig into this real estate sector
i don't really like RE
I believe Zoom is a future spawner as they started from videochatting to now empowering artist(virtual live shows) to a marketplace for developers building Zoom related apps(ZAPPS). I am confident something good will arise.
Also Bytedance is a Spawner, sadly no one can invest in it.
zoom is still focused on doing zoom :-) but we will see! Thanks for sharing!
@@Value-Investing True not denying that 🤣. I listened to their quarterly earnings and they are planning to broaden out to ‘new’ growth markets.
Would you say most traditional holding companies that try and stimulate the companies they own in their portfolio, are also spawners? I saw you have Berkshire on the list. In that case I would suggest a Belgian holding company, Ackermans & Van Haaren. They have a lot of companies under their umbrella, from a big construction and dredging company (not a lot of them on the stock market), to banks, real estate and biotech. The Belgian stock exchange has a lot of similar companies (Brederode, GIMV, Sofina, etc.). Personally I think these companies (like Berkshire) are extremely difficult to understand and valuate as it's hard to valuate all the separate pieces to the company.
will be interesting to look at! Bedankt!
Please do more Russian , Turkish, Spanish, South African etc value stocks. Particularly interested in qiwi.
thanks, will do!
Spawners aka (tech) growth stocks or conglomerates that make successful mergers. Hindsight is wonderful!
I'm not a huge fan of that book (Richer Wiser Happier) he seems to have largely copied Market Wizards, and a lot of the stories seem to be of people who got rich off Amazon. Nethertheless, I enjoyed your video as always :)
thanks - I like your point - I am always looking to improve and learn new things - in my case the framework just comes on top of value, so just as a bonus!
I pretty liked to read the book. But I liked the chapters about Value the most although they were a little bit repetitive. But I fully get your point. The Stories, especially later in the Book, about buying just Amazon and Bitcoin or only Amazon or Alphabet seemed to me include a strong survivorship bias. Very interesting would be how much people had the same Framework but only 2-3 other Stocks. In Addition I truly can't unterstand the spawner Framework from a risk and reward perspective like Sven desribed in a video (100 bagger) earlier. In my opinion too much risk (especially bad returns) for a very little chance of pretty exuberant returns. Therefore I stay with Kahn (and Sven of course): Risk first!
Maybe it is possible to add this strategy on top of Value. For Example: Lets say Alibaba is 50% undervalued (hypothetic). In this case it would has a big margin of safety (value). The Price goes up to the fair price. You sell half of your position and take your starting capital out and just let the rest run for free. If it will be later a 10x-100x, fine, if it goes bankrupt you have no return but didnt lost any origin capital. Question is if you have gotten better if you had invest the whole sum for another 2x and so on?
Hi Sven, wouldn't you say that SPY or VOO is the ultimate spawner?
not really creating new businesses, just adding expensive ones, keep in mind the trick is in finding them small !
Hi Sven. Been following you for years but I'm confused about one thing: How do you realize on a 10 bagger if you sell most value stocks once they reach fair value? (like disney recently? thanks!
You don’t sell when a stock reaches “fair value” you only sell once the price has become too exuberant compared to the future run way, future prospects of the company. This however is very subjective and is the reason investing is so difficult.
@@tylerhealey1506 so you kind of have to be a growth investor to make multibaggers? no margin of safety and betting on future expectations
that is exactly the difference here :-) You look for businesses that constantly grow value, not just reach fair value!
@@ultramarineization kind of but your not betting on future expectations your looking at what’s probable. Like for example Tesla at its highest market cap would have had to do some crazy thing in the future in order to achieve the grow expectations, in that situation you would sell because the stock price has become to exuberant for what is probable in the future. Another thing to add here is your “ fair value” is not pin point it’s more of a grey area where you look to see if the price is way below this area(buy) way above this area (sell). You are not looking at a stock saying I think it’s should be £83 and it’s £80 I’m buying and waiting for it to get to £83 and then selling.
And what is actually behind the success of such spawners is their 1 main business that is basically a monopoly or at least has a crazy moat (like Google advertising). That's what we need to be looking for - the ability to produce juicy cash in the long-term, only with this achieved companies can brench out or acquire other divisions
you got that one good:-) Spawning at low cost - that is the secret juice of low risk and high reward investing!
Thanks for the video.
Are you sure Tencent still owns 5% os Tesla?
do you know where can I find a summary of Tencent holdings and percentages? I did not find it on their website.
Thanks a lot great video!
that is hard to get, but there is an excel file - it was shared on the platform I think!
@@Value-Investing I mean, there is some information in Wikipedia…but who knows if it is still valid…I wonder if this kind of things shouldn’t be reported in the quarterly reports….
$idt is a great spawner in this case. Mr. Howard Jonas is just on fire recently.
thanks for sharing!
Baba is so good spawner with good valuation.
yes it is!
You may have to consider Apple a spawner with Apple Pay, the (possilbe) Apple car, along with the iPhone itself plus the iTunes.
It is definitely a spawner! Iphone, Ipad, Iwatch, ITV!
Do consider Mercadolibre as a spawner. Around 50B.
Think of it as an Ebay, Amazon hybrid in Latin America.
I don't know it that well...
Sven would you ever look into ZEPP health ? Seems like a spawner but also just undervalued with
on the list!
Regarding Google, I started buying Google a bit late (in 2018), I really like the type of innovation they do and they really go for cutting edge and global life changing investments. I think it's possible for them to x4 is the long term. I've often found that I am an early adopter of technology, but I didn't extrapolate that into others that will follow for the coming decade - Googles platforms are all the biggest AND best within their area. They have like 70% to 80% market share with TH-cam, Google Search, Maps, Chrome, Android and more platforms. People might see this as a bad thing that they already have so much market share, but I see it as an opportunity to always expand and add new features to their ecosystems that you want to buy and since I've started subscribing to their services - which I believe is still quite early compared to the decades to come it will be even more significant. I believe users will feel compelled to stay within their ecosystem just like Apple users (without the pseudo forced to stay). If Alphabet can start to capitalize on hardware to a bigger extent like Apple have done then I see great value added for shareholders. On top of that they do impressive research within fields like AI, quantum computing etc. Basically no debt and more than $100 billion in cash, so they are ready to expand. On the flip side - they are very big and the valuation is high.
thanks for sharing!
My head is spawning now:))
hahaha, good one!
Sven are you worried about investing in ADR businesses from china such as tencent, alibaba etc
I accept it as a risk, I don\'t worry :-)
Companies who spawn unrelated businesses feel like business deworsification. I think that companies who spawn complementary businesses ( spawns that relate to the core business ) are the better investments.
the quality of spawning is key!
OSTK under $70 should be a top five spawner. Can you post a video with your thoughts?
thanks for sharing!
Please make a full analysis on SOFI
thanks for suggesting!
Hi Sven , i would like to know in Swizterlamd SIX exchange stocks will ha corporate actions like BONUS/Split SHARES? For the stocks . Heance i am from India and i am interested in Swiss SIX exchange but i checked a lot about it but not found enough Data ,please share if possible a view video
thanks for suggesting!
What about Prosus ? That's a real spawner in my opinion.
thanks for sharing!
Naspers is better
@@jamie2015 Nasper is listed only on the South African stock exchange
@@paulgrecu2006 so what? With degiro i can invest in it throug the German stock exchange
Probably also dollar
To find new spawners that possibly 10-100x, it is the best way to find in the small cap? due to most large cap companies already more than 1Billion market Cap
1 billion to 50 billion is something I wouldn't mind
Would you consider salesforce a spawner?
I don't know its DNA that well :-(
Infoedge(India)
thanks for sharing!
Now to find low cap spawner companies 🙂
that is what we are working on!
Pinduoduo's ticker is PDD
thanks!
@@Value-Investing hank you for your great videos!
I think this may also be known as ‘the bet and hope’ strategy.😆
we are looking for one business over 5 years, thus it is about concentration too!