TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley

Summary of TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley

by The Investor's Podcast Network

1h 29m•December 5, 2025
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Overview of TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley

This episode of The Investor’s Podcast (TIP774) features Sean O’Malley (host of the Intrinsic Value Podcast) in conversation with Clay Fink. They review how Sean’s Intrinsic Value portfolio has performed, discuss investment theses for names including Adobe, Lululemon, Nike and others, explain the team’s approach to valuation and portfolio construction, and walk through their research workflow for covering a new company each week. The discussion emphasizes long-term compounding, the value of patience (and cash), using consumer insights as an edge, and practical valuation discipline in an era of AI-driven narratives.

Key takeaways

  • The Intrinsic Value portfolio started 2025 in 100% cash; after gradual allocation it’s now roughly one-third cash and is up over 10% year-to-date (including cash).
  • Sean and Daniel favor owning large, consumer-facing tech/platform businesses that have high margins, network effects and strong switching costs rather than trying to time many short-term trades.
  • They avoid businesses they don’t understand (e.g., semiconductors like NVIDIA) because durable competitive advantages are harder to assess in performance-driven, engineering-led industries.
  • Market narratives (AI winners/losers) can distort prices — Adobe is used as a prime example of fundamentals compounding while the multiple compresses due to AI fear.
  • Research process: deep reading of filings and calls, use of tools (NotebookLM, ChatGPT), and synthesizing into written theses — the act of writing is central to building conviction.

Portfolio performance & high-level commentary

  • Started 2025 at 100% cash; over the year they have slowly deployed capital and remain selective — cash is deliberate and opportunistic.
  • Entire portfolio (including cash) up >10% YTD despite large cash balance.
  • Notable winners since purchase: Reddit (at one point ~3x), Uber (+~50% from purchase), Nubank (+~40%), Ulta (+~40%), Alphabet (+~60% since they bought it).
  • They trimmed Reddit and Ulta after large rallies to manage position sizing and valuation.
  • Typical position sizing target ≈ 5% of portfolio; Nike is a smaller 2% position currently.

Stock-specific summaries (thesis snapshots)

Adobe

  • Thesis: High-quality, recurring-subscription enterprise business; strong switching costs and deep enterprise adoption (creative and marketing workflows).
  • Concern: Generative AI + low-cost alternatives (Canva) creating a “narrative” of disruption.
  • Defense: Adobe integrates its own AI (Firefly), trains models on licensed data (legal/enterprise safety), and services high-end enterprise workflows where copyright/quality matters.
  • Valuation: Historically high PE (~50); multiple compressed to ~20. Sean & Daniel estimate intrinsic value north of $500; their margin-of-safety target ≈ $400 (stock referenced around ~$330 in discussion). They’ve been buying on weakness.

Lululemon

  • Thesis: Durable premium brand with high customer loyalty and controlled pricing; international growth (China) and buybacks provide upside.
  • Risk: Fashion/retail is highly competitive; brand risk if management chases sales with heavy discounting.
  • Valuation: Stock down ~50% and trading at low multiples (PE ~12); Sean treats this as a low hurdle opportunity but keeps it sized reasonably (not a core concentrated bet).

Nike

  • Thesis: One of the strongest global brands; ability to spend modest % of revenue to defend/restore relevancy and ROIC (~25% over past 5 years).
  • Risk: Relevance in the US has declined; past strategic mistakes (overreach into first-party retail) hurt results.
  • Positioning: Smaller weighting (2%); potential for turnaround but treated cautiously.

Alphabet (Google)

  • Thesis: Core long-duration compounder and one of their largest positions; Sean notes markets still create opportunities even for mega-caps (big swings in price).
  • Insight: You don’t have to find obscure companies to find mispricings.

Reddit, Uber, Nubank, PayPal, Ulta, Ferrari (watchlist/ideas)

  • Reddit: Platform ad business with network effects; trimmed post-run due to valuation stretch.
  • Uber: Logistics + membership + ads; they remain bullish (autonomy fears may be overstated).
  • PayPal: Daniel views it as one of the most undervalued picks.
  • Ferrari: High-quality luxury pricing power, strong margins, compounding ~24% since 2016; close to being added — they want a margin of safety.
  • Ulta: Took profits after a big run; nearing fair value.

Research process (practical workflow)

  • Start with filings: download 10-Ks / 10-Qs and earnings call transcripts from investor relations.
  • Use tools: NotebookLM (to synthesize documents and summarize segments/risks), Quarter (for calls), and ChatGPT as a “sparring partner” to generate questions and probe scenarios.
  • Consume public research: podcasts, newsletters, Value Investors Club writeups, Twitter threads, and YouTube interviews to understand market narratives and counterarguments.
  • Create a master Google Doc (10–20+ pages) capturing quotes, charts, metrics, and anecdotes.
  • Synthesis by writing: force yourself to explain the business simply (aim to explain to a fifth-grader). Writing the investment thesis is the most valuable step to sharpen thinking and expose missing pieces.
  • Time-budget: they aim for ~40 hours/week on different companies; 40 hours of focused work typically captures 80–90% of what’s needed for a quality long-term thesis.
  • Valuation: Reverse DCF/“implied growth” analysis to see what expectations are priced in and whether the purchase price offers attractive long-term returns + margin of safety.

Notable quotes & investing principles

  • “Swing only on fat pitches” — focus on a few great long-term opportunities rather than many small short-term bets.
  • Having cash is not a failure — it’s optionality to capitalize on market dislocations.
  • “If you can’t explain it to a fifth grader, you don’t understand it well enough” — clarity through writing.
  • Prefer businesses you use as consumers to gain early intuition and detect product shifts.

Risks they monitor (what would change their mind)

  • Evidence of customer defections or widespread enterprise switches away from Adobe’s ecosystem.
  • Structural degradation of brand or economics (Lululemon/Nike) driven by persistent discounting or execution failure.
  • Deteriorating financials (shrinking revenue, margin compression) that indicate durable earnings impairment.
  • For all holdings: reassess if market prices fully reflect fundamental deterioration or if new competitive changes are material.

Practical next steps & resources (for listeners)

  • Follow the Intrinsic Value Podcast and subscribe to their newsletter for weekly write-ups and portfolio updates.
  • Tools mentioned: NotebookLM (document-sourced AI summarization), ChatGPT, Quarter (earnings calls).
  • Models & notes: Sean referenced valuation models and show notes — those are available via the episode’s show notes at theinvestorspodcast.com and the Intrinsic Value newsletter.

This episode is aimed at investors who want to see how disciplined valuation, consumer insights, and rigorous writing/research can produce a concentrated, long-term-oriented portfolio — and how patience (including holding cash) can be a strategic advantage in volatile markets.