[TOPIC]: Marvell, CoreWeave, and ~90% of the other hyped-up AI stocks are overvalued. But there some small % of AI companies that are undervalued, still. Today we hunt for the baby in the bathwater.

What is a business?

First, visualize the concept of a business being a ‘bottleneck’ around a pipeline.

Each business collects a ‘toll’ on all the cashflow that moves through their pipeline.

Companies with high gross margins + operating margins are able to use a high % of the cash that moves through their pipeline.

Companies with high profitability are able to use a large % of the cash that flows through their pipeline for improvements.

So if $1 goes through the pipeline, and the company has 60% gross margins, then 40% of that cash stays moving through the pipeline in the form of COGS.

And 60% is sent up for the business to use, and retain what it can.

So that 60% goes into the business, and it’s spend on operations, maintain, obligations, and then the rest is retained as Owner Earnings.

Those owner earnings can then be used for good, or for bad.

It can generate a high yield (leading to compounding).

Or it can generate a low yield (leading to value destruction).

It is the job of every great investor to mathematically figure out what the company could actually take out safely in earnings without disrupting future company ops, and then weigh that against what are they actually doing with the cash.

Specifically, owners earnings can be used for a number of activities:

They could decide to shrink the companies outstanding shares, therefore making the current stock more valuable to holders.

They could decide to re-invest in growth capex, which would be another way of tightening their grip on that pipeline so they can extract a larger toll.

They could acquire companies which gives them new pipelines of cashflow, or enhances their own.

And so fourth.

But, there’s a catch…

The fact that you’re earning a ton of money, and growing your stranglehold on the pipeline, does NOT mean it’s a good investment for a stock picker.

It could be a great business at a bad price.

As Buffett says, “PRICE IS WHAT YOU PAY, VALUE IS WHAT YOU GET.”

Let’s take Marvel for example…

It evidently has a strangle hold on the bottle neck, and you can argue demand is remaining strong for years on AI.

They are generating more cash than ever before, however, this fact has already been priced into the stock.

In fact, MRVL is generating $1.6 Billion of Operating Income…. yet already valued at $150 Billion.

So you’re only earning a roughly 1% yield on your cash.

That sucks.

Especially when you can get 4x that from risk-free treasury.

Find the Baby in the bath water

90%+ of AI stocks are overvalued.

All the net-benefits of demand have been priced in by investors. And even after their 30% pullback I surmise there’s plenty of room for a further drop from AI.

HOWEVER….

There are also some AI companies out there who did not rise over the last year on a stock price basis.

Yet they grew revenue and profitability 50%+.

And those companies are earning you 10% yield on your cash… wayyyy higher than treasury rate.

In other words, those are the companies you want to own, those are paying you for the risk.

So when investors throw out all of the AI pure plays and stocks tank…. your job is to find the baby in that bathwater, buy the baby, and hold on for dear life as it’s going to be a volatile ride as the rest of the water gets drained out.

Good luck!

~Don Stein

SUBSTACK.MEETDONSTEIN.COM

https://x.com/donversationz

[TOPIC]: I hope you walk away from this newsletter feeling this was educational, rather than super-boring mathematics and investment jargon.

Can I earn ~15% on my cash per year over the long term?

That’s pretty much all he asks.

Before computers were digital, Buffett was investing into early computers.

You likely didn’t know that.

But his assistant at the time (seen below) - tells quite the story about how he thinks about a deal.

I’ve watched this 15 times.

So Am I Failing?

I built a portfolio around this 15% concept. But it’s way harder to do than she makes it sound. My average is below that… well below that, so am I failing the test?

I could be. But, as you’ll see if you read the full newsletter, it’s never that easy to know your true return % on cash relative to your investment, and also, relative mis-pricing relative to the companies intrinsic value.

So you can see my portfolio’s average expected return on cash is about 6.2% (green row).

Each of the lines below that contain in the far left column the expected Return on Cash based on my average price in an individual stock we own.

You’d think it would be as simple as knowing your average, then cutting the things below that.

It’s not (sadly).

For example, the company up top earnings 10% on my cash is a pure-AI play.

Never before in company history has it grown so much, profited so much, and has such incredible luck.

And it may never again.

So using the 10% number is somewhat foolish, because although in the moment you’re earning 10%, it’s likely in the future that would decrease as revenue/growth/profitability decreases.

But then you must ask yourself, WHEN?

Which leads me to one of my favorite ever Buffett quotes:

“A bird in the hand is worth two in the bush…. well that’s mostly true in investing. But you also need to ask… #1, how sure are you there’s two in that bush? and #2, how long will it take to get them out?”

With a 10% annual yield, it implies we must earn these returns on our cash for 7 years before we earn our full investment back from cashflows.

Sometimes that might be paid out to us, but preferably the CEO keeps it each year, and can continue to re-invest at the same 10% rate or higher.

So far, this AI company has, but when does it stop?

Now shift attention to the bottom of the list, the 4.5% yielding company

There’s a company who is stable, also growing key metrics 20%, however, it’s European, unproven to American investors, and is purposely lowering operating margins in order to invest in growth.

They grew their customer base to 12m+ in their recent report, a 20% increase from last year.

That’s very impressive.

But, the hit to profitability has investors scared.

Despite the CEO saying it’s not the right time to focus on pure profitability of those new customers.

He’s rather go from 10m to 12m customers at slightly worse margins, than go from 10 to 10.5 at great margins.

So when will he turn on the heavier monetization and less growth?

Imagine the 10% Company reverts to their normalized profitability rate, and the 4.5% Company stops re-investing and starts harvesting.

You might see the 10% become 4%, plus you suffer impaired principle because the stock would also decline.

And we might see the 4.5% increase to 8%, plus the stock would increase. Since it spent years re-investing, or dealing with a slow market, it’s fair to assume that 8% is the new normalized.

Does Buffet Actually Think Like this…?

Not identify, obviously. But directionally, yes, I think so.

I’ll explain simply.

Lennar is a top 3 homebuilder in the USA.

It’s stock was $75/share.

Almost nobody wanted it, you can see it was down 30% on the year.

But, Berkshire wanted it.

Berkshire bought Lennar’s stock so heavily it grew to be a 10%+ owner. (I bought it, too).

Lennar was trading at $75/share.

It’s reported tangible book value per share was $75.

In human language, the value of their real estate and land-rights equated to roughly to the entire value of the company.

That makes sense.

But then you realize they also EARN $4 per share.

So wait… Berkshire was buying a company at-cost of the real estate assets, and then getting the annual earnings for free?

Yes.

He’s buying the company for the same value of the real estate assets at cost, and getting the earnings for free.

But, it gets better.

That $4/75 is only a 5.333% return on book.

I thought Buffet wants 15% on his cash?

So then you strip back all the noise of ‘real estate will collapse’ from CNBC, and you look at the 10 year history of Lennar.

They average somewhere between $7-9 diluted normalized earnings per share.

Which 9/75 = 12%

Plus a 2.38% dividend, and there’s buffets 14-15%.

The key is that he’s willing to wait for it.

This brings me to another fave quote from Buff, he says,

“I’d rather have a bumpy 15% than a smooth 10%”

Lennar is a great example.

It feels awful buying it when rates are skyrocketing, everyone is selling, CNBC is telling you Real Estate is collapsing… and yet that is exactly when Buffet is buying.

All he see’s is 15%.

DISCLAIMER

I’m still in intense learning mode, so it’s fairly likely some of my assumptions are incorrect. DO NOT TAKE WHAT I SAY FOR GRANTED. Do you own research. You’re very likely to lose money, and even I’m afraid of my portfolio. It’s a dangerous game, very very very few people are Buffet. 99.999% of them fail miserly in stocks. So you’re better off just studying, waiting, and do not buy things without actually underwriting it yourself.

There’s also a major disclaimer that it’s BERKSHIRE buying Lennar, not Buffet directly. Or not that we know of. This makes it very hard to give full credibility to these lessons. And absolutely makes me second guess my decisions and assumptions. But, the normalized math does work for Lennar, and that’s what Buffet teaches. So if it’s him, or the spirit of Berkshire, it’s still better to learn from than ignore.

~Don

SUBSTACK.MEETDONSTEIN.COM

https://x.com/donversationz

P.s. Oh yeah! I was so busy explaining to you all the thinking, I forgot the real reason I wrote this today, because I’m going through some decisions around allocating between that 10% and 4.5%.

I almost think Buffet’s answer would be, ‘neither, too hard.’

I know Charlie Munger’s would be.

There’s a reason they love Coca Cola so much.

You’re basically never replacing their soft drinks in the mind of consumer, no company will ever compete with them on scale, and the business grows so slowly that the return on cash is the return on cash. What you see is what you get. The cyclicality, and investment phase, aren’t going to skew earnings power all that much. It’s just a quality company, durable, and growing. That’s what Buffet likes.

So would he buy this 10% yielding company I own? Probably not.

Would be buy the 5% yielding one? Probably not.

He would say something like, “they could make you money, absolutely. They could also loose you money. Depends heavily on the future, and I’m not smart enough to predict the future. So those are too smart for my circle of competence.”

And that’s why he’s the best.

And that’s why when I met him, I asked, what is the ONLY #1 THING that matters most for investing.

And he said….

“Learn your circle of competence. And wait for your pitch.”

So by me holding the quality company yielding 5% at trough earnings, or the quality company yielding 10% at peak earnings, in both scenarios I’m learning my circle of competence.

Buffet did this for 60 years.

He bought Berkshire at age 34.

I’m younger than that.

So everything I do is built around 60 years of learning.

60 years of getting better.

I’m not risking too much in either scenario, but I’m risking enough for it to make a difference.

They might both work out, they might both not.

But the more important lessons I’ll come from my observing them, and watching how I naturally act as a holder.

If I really can’t stand holding one type, then that’s great insight for our future investment strategies.

Charlie Munger said, “If you remove our top 20 investments over the last 60 years, we’ve really got a crummy track record. That means we made one good decision every 3 years.”

The key is to keep learning until that decision presents itself, then go in heavy.

~Don (again)

SUBSTACK.MEETDONSTEIN.COM (again)

https://x.com/donversationz (again)

[TOPIC]: Today’s newsletter is reminding you that YOU MUST GO THE EXTRA 10% to differentiate you from the other thousands of people who are trying to accomplish your same goal.

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Dear Mystery Person,

(you know who you are)

I can point to our happen-stance meeting 11 years ago as the beginning moment of my pursuit of VC. Your lessons about ‘just show up’ and ‘do what you want’ were some of the greatest gifts I ever received.

2015: Time travel to March, 2015.

I’m 21 years old.

No job.

No credibility.

No particular expertise.

No network.

Just a kid with an unreasonable amount of ambition, very little idea what he was doing, and a laptop.

Naturally, I thought I was going to change the world.

I just wasn’t sure how.

One weekend, I went to Starbucks in Naples, Florida, to work on some random startup-related stuff.

Sitting nearby was another guy on his laptop.

I overheard him talking about startups, Techstars, and venture capital.

Now, this was Naples, Florida.

Not Silicon Valley.

Not New York.

Naples.

A place where the average conversation at Starbucks was considerably more likely to involve golf than venture capital.

So I turned to him and said something along the lines of:

“Hey, I like startups too.”

An exceptionally sophisticated opening line.

And that was it.

One sentence that changed the trajectory of my life.

The stranger turned out to be a guy named Bronson Taylor (personal website: www.bronsontaylor.com)

And unbeknownst to me, I’d stumbled upon one of the most startup-obsessed, growth-hacking, internet-building people I could have possibly met in Florida.

In Naples Starbucks, of all places!

He was working on a startup and applying to Techstars.

He would eventually get accepted.

But what I remember most wasn’t his startup.

It wasn’t his credentials.

It wasn’t even his advice.

It was the genuine feeling that he believed in me.

1. He believed in me before there was much reason to.

At 21, I had plenty of enthusiasm and very little evidence that I was capable of doing anything particularly impressive.

Bronson didn’t seem bothered by that.

His attitude was essentially:

“Yeah, of course you can do anything. Why wouldn’t you? Go do it.”

Not in some manufactured motivational-speaker kind of way.

He genuinely seemed to believe that people could just go out and build things.

And that I could be one of them.

It was incredibly refreshing.

For perhaps the first time, I met somebody who thought it was perfectly normal to spend a weekend sitting in a coffee shop working on a startup that might amount to absolutely nothing.

He was doing it for the love of the game.

And I think he recognized that same enthusiasm in me.

That’s something I’ve never forgotten.

Sometimes the most important thing someone can give you is permission to go for it.

Not literal permission, of course.

But the confidence to believe that your ambitions aren’t ridiculous.

Or, at least, that being ridiculous shouldn’t stop you.

2. He encouraged me to fly to San Francisco for the first time…

At this point in my life, I knew I wanted to work in investing.

I just didn’t know exactly what kind.

Wall Street? New York?

Private equity? Chicago?

Venture capital? San Fran?

I’d spent that summer listening to Barbarians at the Gate approximately 20 times.

(Famous PE book about hostile takeovers)

Wall Street seemed snooty - I hate wearing a suit.

Private equity seemed too debt-dependent.

And venture capital?

Well, venture capital sounded awesome.

You got to hang out with ambitious founders building futuristic things, talk about exciting ideas, and potentially make a lot of money.

Sign me up!

I was particularly obsessed with virtual reality.

And there was a venture firm in San Francisco called Rothenberg Ventures that had a VR accelerator I desperately wanted to work for.

One small problem.

I was a 21-year-old kid in Naples, Florida, with no relevant experience and no meaningful connections.

Not exactly the résumé Silicon Valley was waiting for.

Somehow, during our conversation, the idea came up that I should simply show up.

Literally.

Show up.

Go to San Francisco.

Walk into the office.

Introduce myself.

I don’t remember exactly whether Bronson was the person who explicitly suggested it.

Eleven years is a long time, and my memory isn’t exactly a steel trap.

But I do remember how that conversation made me feel.

And that it motivated me to get off my butt, and go for it.

For those of you who know me, you know that’s my M.O.

That doing something slightly unreasonable wasn’t necessarily unreasonable.

That you didn’t need to wait until somebody invited you.

That if you wanted something badly enough, you could just go after it.

And sometimes the difference between the person who gets the opportunity and the person who doesn’t is embarrassingly small.

It’s not the person, it’s the effort.

The additional effort often isn’t difficult.

It’s just unusual.

And, feels risky.

Most people stop when they’ve done what is expected.

And remarkably often, that’s where the opportunity begins.

I rushed home to tell my parents all about this incredible guy I’d met.

My mom still remembers him to this day.

Although she doesn’t quite remember his name.

“Whatever happened to that Starbucks guy? Branson?”

His name is Bronson.

My name is Brandon.

And my Momma somehow combined us into Branson.

Like Brad and Angelina, Brangelina.

Except considerably less glamorous.

Anyway.

That was 2015.

2026: Fast-forward eleven years.

It’s last Monday, October 12th, 2026.

I have a very important appointment.

Not with an investor.

Not with a founder.

Not with somebody who might change my life.

My dog needs blood drawn for his annual heartworm test.

Very glamorous stuff.

So I drive approximately 45 minutes to the veterinarian.

There’s a random little café next door.

I figure I’ll grab a coffee and get some work done while I’m there.

I walk inside.

There’s one other customer.

Just one.

Some guy sitting at a table, cranking away on his laptop.

I order my coffee.

The woman at the counter compliments my dog.

Naturally.

He’s adorable.

She compliments me.

Naturally.

I’m adorable.

When I return to collect my coffee, I hear a voice.

“...Brandon?”

I look up.

The guy at the laptop is staring at me.

And then…“Dude, it’s me, Bronson!”

ARE YOU KIDDING ME?!

Eleven years.

Thousands of days.

Countless coffee shops.

And here we are.

Two guys who independently decided to bring their laptops to a random café and work on their own projects.

Again.

The exact same scenario.

The exact same person.

The same stranger.

This time, familiar.

Just eleven years older. And both of us with a longer beard.

(We’d actually hung out for lunch about five years to catch up, but still, fate).

What are the odds?

We start catching up.

He tells me he gets my Monday emails.

“Wait, you actually read those ?”

Apparently somebody does!

Fantastic.

So I run off to handle my dog duties, and we schedule a meeting for 48 hours later.

When you operate like he and I do, 48 hours is a longggg time. A lot can happen.

3. The love of the game

Two days later, we sit down.

I ask Bronson what he’s been building.

Now, here’s something I’ve noticed about exceptional founders.

When you ask average people about what they’re working on, they tell you about it.

They explain the market.

The business model.

The opportunity.

The strategy.

And sometimes they’ll explain it for so long that you start dozing off.

But the really exceptional builders?

They show you.

Bronson immediately pulls out his laptop.

And begins showing me what he’s built. And, how it’s generating profit.

Check out Bronson's AI Agency

Now he built about 50 things with AI for clients, but what he built for his own company operations was by far the most unique… his own operating system.

Let me repeat that.

HIS. OWN. OPERATING. SYSTEM.

Not an application.

Not a website.

An entire custom computing environment.

He’d purchased a Linux laptop and built his own personalized operating system.

Not Apple Mac OS.

Not Windows OS.

Rather, Bronson Taylor OS.

His own menus.

His own interfaces.

His own workflows.

Everything customized down to the system level.

And it was collaborative.

His brother and business partner could work LIVE inside the environment alongside him.

He’d effectively assembled his own versions of functionality you’d normally associate with Slack, ChatGPT, Chrome, and other productivity tools.

All integrated into one custom system.

And everything on the computer is fully enabled by AI.

I’m sitting there thinking:

Who the heck wakes up one morning and decides to build their own Linux based operating system?!

And the best part?

He didn’t do it because somebody hired him to.

He didn’t do it because a VC told him the TAM was enormous.

He did it because he thought it would be useful.

And because he could.

For the love of the game.

The same reason he was sitting in Starbucks eleven years earlier.

The technology had changed.

The ambition hadn’t.

And now he has a FULLY CUSTOM computer, built on Linux, backed by an AI brain built custom with GPT + Cloudflare.

Message Bronson:

Sign Up - Tell Him DON Sent You

I receive no $ and no benefit, but if you’re working with a big company, I HIGHLY RECOMMEND you reach out and chat with Bronson about what AI can do for you.

SaaS is Custom.

Bronson is deploying enormous numbers of AI agents using infrastructure into traditional companies.

Agents processing data.

Agents completing tasks.

Agents working with other agents.

I’d imagine he has 10,000 agents working for his clients, at least.

Work that historically might have required entire teams of employees.

And he’s doing it for existing, traditional companies.

Not just shiny Silicon Valley startups.

Although, his client list has plenty of brand names in Tech.

You can see Google, Delta, Microsoft, Nike, etc…

See his clients here

Iconic businesses.

All in need of help with workflows.

The types of companies that have been using the same software for twenty years.

The kind of software where you click a button and briefly wonder whether Windows 95 is still running somewhere in the basement.

And Bronson’s approach is fascinating.

He isn’t ripping out the company’s existing technology.

He’s building an intelligent brain behind it.

Employees continue using the exact same workflows.

The only difference, is now behind the scenes, AI systems begin performing work that used to require enormous amounts of human-brain power.

He’s modernizing the brains of legacy software without replacing the body.

And that leads to a concept he shared that I haven’t stopped thinking about.

“SaaS isn’t dead. The future is custom SaaS.”

Think about that.

For decades, software companies have built one product and sold it to thousands of customers.

Now, they’re going to build thousands of products and sell it one-off per client.

In the old model… customer adapts to the software.

But what happens when AI makes it dramatically cheaper to customize software?

What happens when every company can have technology designed around its own operations?

Its own employees?

Its own processes?

Its own problems?

Instead of paying for a generic software product that does 80% of what you need, perhaps you pay a recurring fee for software that does 99% exactly what you need.

Down to where the buttons are placed.

Software built for the business, instead of the business built around the software.

That’s an intriguing idea.

And it comes with a fascinating question for investors.

If building software becomes dramatically less expensive, where does the economic value migrate?

To the businesses implementing AI to increase margins, NOT the businesses spending $25 billion on datacenter and paying 15% [cough Coreweave cough]

My thesis is Banks, Finance, Insurance, Medical, and Manufacturing companies.

Those companies benefit immensely from enhanced process automation, and intelligent moving of numbers.

Those are the companies where AI can move a few numbers around in a spread sheet, and vastly improve metrics.

I suspect this is going to be an enormously important question over the next decade.

And then, he tells me to open MY laptop.

For the past several months, I’ve been using AI to build my own investment software.

While I’ve made incredible progress, there have also been countless moments when I wanted to throw my computer into the ocean.

And if I didn’t have to go swim after it with the Sharks, I would have.

I’ve struggled with infrastructure and accuracies of enabling my underwriting with an AI brain.

He immediately starts walking me through his approach.

We download the ChatGPT desktop application.

He configures it.

He shows me how it works with Cloudflare agents.

And then we begin moving my application toward that infrastructure.

Except here’s the incredible part.

I’m watching AI actually use the computer.

Moving the mouse.

Navigating websites.

Clicking through interfaces.

II’ve seen people on X talking about agents, automation, coding, and supposedly revolutionary new workflows.

But there’s an enormous difference between watching a video of somebody doing something and sitting next to someone who makes it happen on your laptop, with your use case.

It’s like watching somebody cook on YouTube versus being invited into the Michelin star restaurant.

Suddenly, all these ingredients you’ve been staring at for months begin making sense.

And you’re thinking:

WAIT. I CAN DO THAT?!

And now…. over the past weekend, I trained 50 agents, deployed them, tested, and my Agentic system underwrote 191 companies in my accounting style.

That’s 18,000,000 tokens used over 48 hours, for only $75.

Best part, it’s doing this for $0.18 per company, and then my master agent (who I call Buffett) triple checks that work for an additional $0.11. A whopping 30 cents and 8 minutes… to do what used to take me 2 hours per company.

You read a lot about Anthropic’s cost…. yuck.

That’s why I’m using GPT and Cloudflare.

DO NOT get ripped off by Claude.

You absolutely can build powerful AI for extremely cheap.

He Gave This Gift to his Kids

He didn’t just teach me.

Bronson’s three kids (13, 13, and 19) are also building with AI.

And VERY IMPRESSIVELY.

I remember being 19 and starting my first company, the LegendsCard App.

Serving discount to our local college campuses.

That required ~$8K, split between 5 founders, each paying in $1-2K just to get some junky app going.

And here, his son, was able to build something 10x more impressive, for -10x the price.

At age 19 when I was probably still figuring out how to convince my parents to buy me shoes, Bronson’s son is selling AI services, and launching his own consumer apps.

He introduced me to his son, and man am I impressed!

Check out Mikah's App

I signed up and added my interest for books, and already found one I should read.

He also covers movies, and all types of media integrated directly into an API feed.

What an extraordinary time to be alive.

Links:

Here’s Bronson’s website: https://vectyr.co

Here are Mikah’s website: https://qmedia.app

ROC: ‘Return on Convo’

I’ve spent a lot of time thinking about that coffee meeting from last week.

Not just because of the technology.

Although the technology was incredible.

But because of how familiar the whole experience felt.

In 2015, Bronson showed me a world I didn’t fully understand.

He gave me confidence.

He showed me what was possible.

And he encouraged me to take action rather than wait for permission.

In 2026, he did practically the same thing.

Different technology.

Different chapter of life.

Same mindset.

Believe in what’s possible. Build things. Show people. Keep learning.

And I think there’s a much bigger lesson in that.

The people who have influenced me most have always first and foremost believed in my unknown.

They’ve been the ones whose enthusiasm is contagious.

And I have the ability to run with that enthusiasm for years, as do you.

The people who make you feel that whatever you’re trying to accomplish is not just possible, but worth attempting.

I spend a lot of my life thinking about returns on capital.

How much money a business earns.

What its assets are worth.

Whether management allocates capital intelligently.

Whether an investment will compound over time.

But some of the most extraordinary returns in life don’t show up on a financial statement.

In 2015, Bronson spent a little time talking to a random 21-year-old kid in Starbucks.

He didn’t invest any money.

He didn’t ask for equity.

He didn’t demand anything in return.

He just gave me some of his time, encouragement, and belief.

Eleven years later, I’m still talking about it.

That’s a pretty remarkable return on a conversation.

And it makes me think about how often we underestimate the impact of relatively small interactions.

An introduction.

A thoughtful piece of advice.

A little encouragement.

An extra five minutes with somebody who’s trying to figure things out.

You may forget the conversation entirely.

They might remember it for the rest of their life.

<3

Thank you for reading, and thanks for being a Bronson!

~Don Stein

p.s. Last week’s article I Don’t Give a Luck received some great feedback. Thank you! 🙏

substack.meetdonstein.com

[TOPIC]: Hopefully these thematic reminders and quick visuals bring you (at least) one tidbit of positive thinking, today!

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Dear Founders & Friends,

I’ve now worked remote for 12 years in a row. Over that time, I’ve collected many quotes and visuals to help me keep perspective, and remain positive.

I’d like to share some with you all, I hope it helps:

Delusion is Good

In 2026.. Sam Altman and Elon are enemies.

But in 2019 Sam Altman respected, and learned, from Elon Musk. Delusion is one of the most powerful forces in creation. If you don’t believe you’re going to do it… who is?

Perspective is Everything

Focus on what you can control, and find the beauty in the madness.

“No Pain… No Gain”

-NVIDIA

Jensen is now CEO/Founder of largest company in the world, NVIDIA. But he started out as a janitor, immigrant, who came to America and left his family back abroad. What a champion. He knows pain is growth.

Be Thankful

I love the way this man lives. I hope to emulate it. When something bad happens… train your brain to first be thankful for the good. This is an incredible tip from the legend himself, WB!

Live By Your Standards

Side Hustle or Main Hustle… just do something that will bring you freedom! Escape the rat race as young as you can, it gets 1000x harder as you age.

Focus on the Field

Focus on what you can control in the immediate present moment. The past is the past, the future is unknown, you can only do your best right now.

Support Systems are Key

Tell your parents you love them. This is not from my Dad, but this is definitely the same style of parenting as I thankfully received.

Show Up

It’s live in person.

If you just showed up to the gym 365 days this year, I bet you’d be super healthy and in shape.

Pick your problems

My Dad says, if everyone threw their problems into a pile, and you got to pick, You’d probably take yours back out.

Create Luck

My Dad always told me, “you create your own luck.”

I asked my best friend Corey for a quote for today’s newsletter, and his thinking is along the same lines:

Randomness

From stock market to pandemic, stay ready for anything!

Here’s a visual reminder of just how random the world can be. Actual photo’s from 2020 COVID.

Burn the Boats

Have a great day, readers!

ONE MORE THING

My advisor, Larry, always told me, “it’s very important to have a thing.” Once you have a thing, you can build on it. Here’s a great visual representing that mindset.

Enjoy your Monday!!!

Hopefully these quick visuals brought you one bit of positive thinking today!

~DON

Ps. Next week we’re launching a video based around Shark Tank for Stocks I’ll be pitching my friends 7 of my deals so they can poke holes in the thesis.

Substack.Meetdonstein.Com

[TOPIC]: Two VR insiders tried the Meta VR glasses last week! And, this is what they thought:

TL:DR Summary

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[Week 40/52]

Two VR insiders tried Meta’s VR glasses. Here’s what they thought.

This week, we hear from two VR developers who tried Meta’s VR glasses last week: Hamza Qureshi (@NyanBlade), founder of Virtuware and creator of StageTime VR, and an XR insider from our Spatial Collective community who requested anonymity.

Thank you to both for sharing their hands-on impressions.

Interview #1: Hamza Qureshi (@NyanBlade)

Founder of Virtuware • Creator of StageTime VR

Hamza Qureshi is the founder of Virtuware and creator of StageTime, a social VR app for karaoke, comedy, open mic nights and hanging out. Previously a software engineer at VRChat, he’s been building social VR experiences since 2017. His focus is on making VR a place people come back to for the community and shared experiences.

I’m not his investor. But I’m a supporter! And so thankful for his thoughtful and kind response. So PLEASE! Explore his business: stagetimevr.com⁠

Hamza wrote this for us:

“Hey Don! Positives: It’s the first VR device I’d actually refer to as glasses. They were much smaller than I expected and so lightweight I could hardly feel them on my face. I tried them sitting and standing, and the cable and compute puck didn’t bother me at all.

The micro-OLED displays looked much nicer to me, and the overall experience felt easier on my eyes. I’d want more time before judging comfort over longer sessions, but my first impression was very positive.

The biggest benefit for me is portability and how easy they are to put on and take off. These feel like something I’d look forward to using and could carry with me every day, especially when travelling.

I would personally buy them at $1,300. I’d want to use them as my main device for development. Being able to build and test wherever I am, with less friction, is a big deal. I can also see using them more naturally leading me to develop more for the platform.

Negatives:

The field of view felt noticeably smaller than Quest 3. For mixed reality content it wasn’t so much of an issue as you can see the real world outside the frame. For full VR it felt more restrictive, although I adjusted quickly. I’d primarily be buying these for work, cinema and travel.

While I see the value personally, I’m less certain about mainstream appeal at $1,300. That’s a pretty significant purchase for someone who isn’t already interested in XR. I think they could be a great device for some people, but the everyday reasons to buy and keep using them will need to be compelling.

Unknowns:

Software reliability is my biggest question. With my own Quest, I end up restarting it at least once every day I use it, and every OS update introduces new bugs. That’s my experience with Quest, rather than a verdict on these glasses, but I’d need a more dependable experience to rely on them for daily work. The hardware is attractive enough to make me want to use them.

On battery, I believe it’s expected to last up to twice as long as Quest 3.

Content is another question. Meta has announced more than 75 apps/games that support hand tracking at launch, alongside its media offering. That’s a starting point, but the important thing is whether there are enough useful apps and experiences to keep people coming back. I’m not sure yet.

Overall, I came away wanting a pair. The size and comfort make a real difference to how often I can imagine using them. I still have questions about software and the wider audience, but personally, these feel like something I’d enjoy having with me and using regularly.

Interview #2:

An Anonymous Spatial Collective Insider ❤️

Meta VR Glasses — Early Hands-On Q&A

One of our Spatial Collective members was able to try a prerelease version of Meta’s VR glasses and shared the following reaction anonymously.

Q: Thank you for sharing your experience with Meta’s VR glasses. Before we jump into some Q&A, could you share your overall thoughts on how this new release will influence the market? Will VR finally be ready for the mainstream? Or will the price put it out of reach?

My pleasure. I’ve enjoyed being a part of the Spatial Collective community and feel passionate about developing in this space and supporting those who continue to fight the good fight. We all know it’s not easy developing on the frontier. Hopefully, I can provide some useful information that isn’t just influencer hype or marketing BS. Just an FYI: I can only provide my thoughts on the features they announced, not on everything I experienced.

Overall, I think this upcoming release of Meta’s VR glasses will have a bigger influence on the trajectory of VR adoption than any release prior. Meta’s messaging, features, and most definitely the form factor combine to take a major step forward in a way that feels more legitimate and less toy-like (not that that’s a bad thing).

Is $1,300 too much? No. At this price point it’s positioned in the premium device realm (prosumer). I didn’t know the retail cost when I tried the device, but when they announced the price, I was honestly shocked it was that low. Look, gone are the days of heavily subsidized hardware. Add the chip and material shortages in the market, tariffs, and you could easily price this above $2k.

Will this be the device that accelerates the hockey-stick curve of adoption? I don’t know. However, I do think this is the way to get there. Meta carries over its large content ecosystem, spatial UI, developer tools, and more, which sets it up for a release more like an iPhone than a gaming console. For prosumers, I’m confident they’ll find this to be an easy and even surprisingly useful addition to their digital lives.

Q: What was your immediate reaction when you first saw the Meta VR glasses?

My first reaction was intrigue and excitement. I didn’t immediately know what to expect because the design is a major departure from typical VR headsets. To the casual observer, the only clue these could be display glasses was the tether. Otherwise, I would have thought they were just an oversized pair of glasses, like ’90s rock-star Bono bug-eye sunglasses.

Q: Did they feel like glasses when you first put them on, or did they still feel like a VR headset?

They fit like regular glasses, unlike the experience of strapping a VR headset to your face. Certainly, Meta’s VR glasses are built for all-day comfort. Super light. Easy on and off. Something that no other device, especially Apple, could claim.

I was surprised the VR glasses are lighter than my own eyeglasses. No joke. It was almost off-putting when I picked them up. The voice in the back of my mind was like, there’s no way these could be quality because they feel too light.

There was a quick calibration setup for eye tracking, then a series of hand-gesture exercises. Overall, first impressions were good and easy enough for anyone to perform.

Do not underestimate the form factor and ease of fit. Vanity has been a huge barrier for most people. For so many years I have seen people put off by the idea of having to strap a brick on their heads…not to mention sharing a headset with someone else!

Q: How was the experience?

I was able to use the Meta VR glasses for about an hour. At no time during that experience did I encounter even an ounce of discomfort. I could absolutely imagine using these throughout the day for a variety of reasons: productivity, entertainment, gaming, relaxing, and even just browsing the web or reading.

The device immediately started in passthrough mode. The display FOV was adequate and responsive. I wouldn’t say the VR glasses’ FOV was as immersive as some other VR headsets, but it also didn’t bother me. It’s good. I did have a few visual glitches in my demo, but I would be confident any glitches would be ironed out before shipping.

The display is good: bright display, and good color. Eye tracking combined with simple gestures makes it easy and intuitive to control. You don’t need to make any wild hand gestures to navigate the UI. The quality and reliability of hand tracking and gesture recognition were solid. I could reliably control the UI with subtle movements from various relaxed and natural positions.

I kept thinking to myself that it felt more Apple Vision Pro-like, but way more comfortable.

Q: What was it like watching entertainment or playing games on them?

This was one of the areas I didn’t have time to really explore. I was only using hand controls and didn’t try using physical controllers. Support for physical controllers was mentioned, and I imagined that to mean they would either have new controllers available as an accessory, support existing Quest or gaming controllers, or all of the above. Personally, I wouldn’t mind a slimmed-down version of the controllers to match the ease of use and portability of the VR glasses.

Visually, the display resolution, FOV, and color enhancements make everything look good. To be fair, display enhancements are an expected upgrade. The form factor itself makes watching videos, playing console games, YouTube, or whatever else more accessible. Would goggles make for immersive playing experiences? Probably, but I wouldn’t go as far as to say gaming on glasses will suffer.

I didn’t get a chance to view 3D movies, but I could only imagine this would be a better visual experience than in a theater. That said, I don’t think 3D movies are a compelling use case by themselves.

Q: Will this make VR productivity a thing? Could you imagine working in these glasses for an extended period?

Yes and no. Yes, for people who already find immersive meeting spaces or training useful. No, for people who are already anti-glasses, don’t need to work with others, or find video meetings satisfactory. I think anyone in between those extremes would find this to be a compelling opportunity to experience, because there is a lot to offer here: travel, privacy, connectivity, and so on.

For example: Would this pass the coffee shop test? Walk into a normal coffee shop during the week and you inevitably see tables full of people working on their laptops or browsing on their phones. If several of those people were wearing Meta VR glasses, would you recognize them? Would they stand out? Do you think people would think they look silly? Do you think the wearers would think they look stupid? I would wager the answer is no for all.

Now apply this test to any other normal working environment: trains, planes, co-working spaces, offices, and I think the answer would be the same. No, they don’t look silly, people wearing them don’t stand out, and I don’t feel people wearing them would feel overly self-conscious.

Again, the simplicity of the form factor alone should make it far more accessible to the mass market, which is put off by the traditional strap-on HMD. Add in the improved resolution, comfort, support for DisplayPort, and it should become way more appealing to a wider audience.

Q: Did the separate compute puck bother you?

Not at all. I wouldn’t want to trade for lightness and comfort. I was sitting the entire time I used the device, so the tether and puck were never in the way.

Q: What feels most different from Meta Quest?

The Quest is like a toy (as in focused on fun). The VR glasses feel more serious. It’s not simply that they’re smaller. They really do come across like a premium device, more capable to do more things for more people.

I could see the Quest continue as a budget-friendly line and continue to evolve and improve from the trickle-down of tech. You could also think of the VR glasses as a relaunch of the failed Pro line of VR goggles. The VR glasses are a clear level above Quest in most every way but also seem to target a different market…dare I say an “adult” or “professional” audience. I’ve heard a lot of people say of Quest, “I used it for a while, then gave it to my kid.” I don’t think the VR glasses will suffer the same fate.

Q: What do you think the killer application is? What would make you want to use them every day?

I’m not a big believer in the “killer app” argument. Instead, I think digital devices need to be able to provide a killer experience. They need to support a variety of experiences people actually value and use repeatedly. VR and AR haven’t been in the mass market long enough to know what people may love to use repeatedly. I think the best we could hope for is that VR glasses will become more mainstream and attract more developers to create more diverse experiences.

For me, the threshold for this category isn’t whether the technology is impressive. I expect new iterations of devices to impress. These VR glasses make a strong argument that putting them on becomes easier and more useful than reaching for another screen. I think that’s the really interesting and hopefully compelling idea for people.

Q: What still needs work?

There were a few display glitches, but nothing serious. For the most part everything ran smoothly and the UX was seamless and reacted well to eye and hand tracking + gestures. Nothing stood out during my time that had me thinking it wouldn’t be ready for prime time.

I wasn’t able to use the AI much, but I kinda feel like the influx of these do-it-all AI agents is the new metaverse hype. There are a lot of issues these kinds of agents need to overcome. A LOT.

I also didn’t try or see the new avatars, which looked really cool. If we can get full-body avatars of our actual likeness that don’t fall into the uncanny valley trap, that could open up another layer of applications.

Q: Was there anything else that stood out during your demo?

I think a key feature they just hinted at that worked really well and took me by a bit of surprise was object occlusion. When I placed multiple digital screens into the environment around me, set up like an ideal working environment, real-world objects were properly rendered on top of the digital screens. Which made it so much easier to interact with the real world and objects in it normally. I could see my hands in front of the screens, reach for the drink on the desk in front of me, even objects in your hands appeared correctly. Finally!

Q: Finally, would you buy them?

Yes. I would put them to good use day one, and I’m confident that everyone else in the Spatial Collective community would feel the same way.

If you’re loving what I’ve been cooking up, would greatly appreciate a share and a tag! I’m doing this out of love for the game. Substack.Meetdonstein.Com

Https://x.com/donversationz

~Don

[Topic] More wasted VR money? Do it even matter when you’re drowning in advertising income?

Feelings on Meta VR

Back when everyone was sooooo hyped on Apple VR, I returned mine the day I bought them. I could tell in my gut this was not a hit product

Unfortunately, I’ve not yet tried the META VR, and everyone I’ve asked so far also said, “not yet.”

Those are insiders.

So.. who has actually tried this thing? Message me.

Out of Favor is the Bargain

I was very excited when the stock was beaten down on price, because the company value in that scenario, even with the extra spending on data centers and the off-balance-sheet debt, still felt like a pretty great deal.

We’ll get into how I’m starting to value companies at a later date, but let’s just say it was near an idiot-proof price many months ago, in my eyes. NFA.

Warren Buffett put it perfectly:

“Be fearful when others are greedy, and be greedy when others are fearful.”

Then they launched Muse a few weeks ago, and the world opened up to the idea that maybe Meta actually has a very smart and coherent AI strategy. Maybe they’re being a lot more intelligent with their capital than we thought.

At Meta Connect, it seemed that excitement peaked. The stock had run up 30% in the month and was now in the $700s, and investor sentiment was once again getting very bullish.

“Should I buy Meta?”

In my opinion, that’s the first yellow flag.

When I was buying it, nobody else wanted it, and people said, “Why would you buy Meta?” I had to live with that for months.

Now that everyone’s buying it, I’m way less excited about the bargain.

The potential returns are highest when you’re most uncomfortable.

As Buffett wrote, passing along a lesson from Ben Graham:

“Price is what you pay; value is what you get.”

If you let the price tell you it’s going up, fundamentally that means you already most likely missed the first 15%. Anything short of a re-rating on multiple then will result in mediocre investment at best.

The business can still be great while the bargain gets a lot less great.

And that gets me to virtual reality.

Back to the Goggles Glasses

Just when investor sentiment was turning positive on Meta AI, just when people were starting to associate Meta more with Muse than the metaverse, Zuckerberg decided to get on stage and once again remind everyone of the tens of billions poured into a technology that consumers don’t seem to want at scale.

He unveiled another pair of virtual reality goggles. To me, it’s another reminder of the tens of billions in potential earnings power that we’re essentially throwing down a drain.

That drain is not clogged, and money is being flushed down by the minute.

Now, this was also my bullish thesis on Meta, because I recognized how much money they were wasting and, at the same time, how insanely profitable they remained.

For the most part, this is a business drowning in cash.

However, that cash still has a particular value, and what Meta does with it matters. That’s where ROIC, or return on invested capital, comes in. Are they generating 30% or more annually on the incremental capital they invest?

Muse was spot on, but sentiment already feels like it’s shifting. It’s starting to feel a lot like Threads.

In my eyes, Meta needs the results and the narrative to support a move toward $1,000. Otherwise, I can see it heading back toward $500.

Light-Weight.. but I Might-Wait

I think Meta got closer to what they needed to do in the eyes of consumers. But this should have been done in 2022!!!

And don’t tell me it wasn’t possible. There were SO MANY extra bells and whistles that nobody used in mixed reality headsets.

Standing on stage in 2026 with yet another pair of virtual reality goggles, even lighter ones, still leaves me wondering what I would actually do in them if I owned them.

Zuckerberg described them at Connect like this:

“It is a glimpse of the future.”

I want something I’ll use every day.

Plus, the price tag makes it so that I really have no interest in buying them. At $1,299, I would rather save that money and put it toward the iPhone Duo. Meta says the glasses will ship in the spring.

Now, I’m not saying Apple is a good value or a bargain either. I’m just saying that, as a consumer, if I’m going to spend $1,500 to $2,000 on a piece of technology hardware, I’m definitely going to spend it on the iPhone Duo, and definitely not on Meta VR glasses.

I do respect and appreciate that they decreased the weight of these glasses. I would agree that’s a huge win.

But there are other fundamental issues that have always been an issue, including battery, comfort, performance, social acceptance, use cases, the developer ecosystem, and more.

Where Did the Developers Go?

While many incredible people still grind hard (shout out Alix Olivier), I think probably the biggest challenge for Meta currently is not just winning consumers over to VR. It’s winning the developers back.

From what I’ve seen, it feels like they’ve lost about 80% of VR devs to AI and other correlated technologies. That’s my impression from the ecosystem, not a measured industry statistic.

In my opinion, Meta has some of the best computer vision technology for AI, thanks to billions of dollars spent over the decade on outward-facing cameras and spatial localization. Apple is another obvious heavyweight here.

That’s an enormous foundation to build on.

And to be fair, Zuckerberg did explicitly describe the shift toward AI at Connect:

“So, we have shifted our focus to building the best devices for personal super intelligence.”

That’s the direction I want to hear.

But then we’re back to the VR goggles, and for me, that brings back all the same questions about consumers, developers, and how much more capital this will take.

I Want VR to Work

As many of you know, virtual reality has a dear place in my heart.

Frankly, if these glasses were to take off and be owned by 30, 40, or 50 million people, nothing would make me happier. It would make me feel that I actually spent the last 10 years working on something that matters.

However, I’m getting a ton of yellow flags with this. I’m also not really grasping why Meta is showcasing this now when I still need to see whether the finished product is ready for consumers.

This feels a lot to me like Apple telling me Siri AI was coming in 2024, and yet I’m still waiting for the actual product that works and is up to company standards.

How I Could Be Wrong

Let’s put the probability at 35% to 45% that I’m wrong.

These would be the reasons:

1. I’ve never demoed them.

My estimate is that they’re amazing, but not ready for prime time. I could be wrong, and they could go viral after release.

2. The remote work advantage is 10x a laptop.

If so, sure, I’d absolutely buy a pair!!! Happily!!!

3. The experience is ACTUALLY seamless.

Battery, sign-in, AI first. The whole thing. Actually seamless, not just hand-waving seamless.

If those three end up leaning in Meta’s favor, then I will be the next man in line waiting to buy my headset.

But until I see it for myself and hear from trusted sources, I don’t plan on buying it, sadly.

~Don

Sparknotes Post: https://x.com/donversationz/status/2104750712613667080?s=46

Www.LinkedIn.com/in/donstein

Ps. I feel I have a great perspective given my background: I invested in VR and helped founders for a decade, worked at Meta, ran my own avatar startup with $5 million in funding, and was the AI chatbot advocate on my Meta team while working ther… BUT…. I could be soooo wrong!!! I can’t be sure until I demo them... that seems to be the exact issue. Where are the demo’s?

[Topic]: If you truly love stocks, or people pursuing their dream, then I hope you find today’s stories enjoyable! With a great opportunity at the end.

Getting Serious About Stocks

It’s now been 37 weeks since I started sending out a newsletter every week, I promised myself 52 in a row, and I’m now only 14 away.

So let’s make these the best 14.

The reason I started this practice was simple: bring back a weekly responsibility to my life. It was extremely healthy to have a weekly cadence of responsibilities that I had to keep up with every Weds while running The Spatial Collective.

So for today I’m going to take you back to November 2025: the day I opened myself up to the idea that I would start a weekly newsletter in 2026, and potentially launch a hedge fund.

The below event are how it went down just one month after I shut down Spatial Collective and started wandering lost in the woods, and one month before I put myself in motion.

Behind The Scenes of Why I Started Writing This Weekly:

Almost exactly 1 year ago, I drove to Miami so I could spend the day brainstorming what I wanted to do with my life, here’s where I sat:

That photo above is from my phone, I took it November 21st, 2025.

I know because I went through the trouble of driving 2 hours just for the impact on my brain of switching environments, and sitting there all day with a pen, pad, and Grok (I’ve since switched back to GPT, but thank you Grok for the incredible brainstorming).

The purpose of my trip was to figure out what I could spend the next few decades dedicating myself to.

I only had a moment like this once before in my life…

Virtual Reality in 2015, in College

The last ‘aha’ moment where I found something I could spend decades learning and leading was in 2015, in my college room.

I worked ruthlessly at networking, learning, hosting, connecting, and investing in the industry.

That journey took me across the world (literally, SLUSH was kind enough to fly us out in 2016 to their Iceland Play conference, what an epic time traveling with Tommy and Becky!!!!!! <3), and of course London - the city that forever has my heart.

VR Never Found a Daily Use in my Life

But it is no secret, VR and AR never found a daily use in my life.

I tried to use it daily, but between it messing up my hair, or the battery dying in the left controller… things just were not smooth.

I gave up. I felt I gave it my all for a decade, and just like so many VR pioneers warned me back in 2015, ‘it’s always 10 years away.’

With that sad acceptance, I had to figure out what to do with a VR/AR community that I loved deeply, and was paying my bills.

I tried pivoting us towards where the future was headed, AI. But it resulted more in flailing than success.

I tried tons of programs, I threw stuff at the wall, I embarrassed myself and risked everything we had built in order to keep it alive. I knew it couldn’t continue as XR.

All the while, as this is happening, I started making more money than I had ever made (on paper…) from ETH during that last crypto summer.

Combine that with a love for stocks since as far back as I have memories, and it seemed like investing could be a great potential fit.

November 2025: Taking Us Back to Canal Side in Miami

All that above text, was a long way of saying I was lost with no direction on the day I took this photo (ok so now we teleport back here):

I built out a very complex matrix of happiness x income x passion on the notepad, and spent hours trying to fit business ideas into it.

I kept coming back to some version of an investment fund, but that sounded crazy at the time.

A few people changed my thinking; Dad, Mom, and Larry.

We’ll dive into the founding story another time, but I want to wrap this up with

details on what I want to morph his newsletter in to.

April/May 2026: Fund Officially Launches

We go live.

Now I have a newsletter with no consistency of topics, no nucleus, and a fund.

So naturally, I need to merge these two somehow, in a fun, cool, productive manner.

So! …. I was thinking… the AI platform I’ve been building is now full crank, I should use it with a few of you all in a private Zoom session with other people who love stocks.

I’ve been cranking on this, and it’s been extremely helpful for my game.

I’ve gotten it to the point of sourcing, vetting, underwriting, valuing, tracking, and telling me when to buy/sell.

The yellow line was our entry price, the red is current price.

I’ve put 100’s of hours into this system, and now I want to share the conversation with anyone who actually truly also loves stocks.

In order to get this system to work, and standardize stock comps, I had to create my own version of accounting so I can underwrite each company against only 2 key metrics. Happy to share more about those as I want a small group to battle test this thesis.

You’re Invited to Our Quarterly Call…

We’re launching a quarterly talk club. And our first convo will focus around using this platform to break down 1-3 stocks IN DEPTH. And I mean… DEPTH!

FAQ:

1. Cost money? NO. We're doing this for the love of stocks.

2. Cost time? YES. We want dedicated attendees who love stocks.

3. When? IDK. I'll let you know as soon as I look through applicants

Request an Invite if you’d like to JOIN:

• Name?

• Have you attended Don’s online event before?

• Do you invest in stocks actively?

• Do you love business?

• Are you able to tune in and participate for 90 minutes doing a deep dive on 1-3 stocks: financials, trends, CEO, etc... a fun, deep discussion you definitely are not getting on CNBC SQUAK SQUAK SQUAK Box.

• Email to send your invite?

Answer Them Here

I HOPE TO SEE YOU ALL THERE! APPLY THIS WEEK, I’LL SORT THROUGH THE 2 PPL WHO DO APPLY BY MONDAY! ;)

SOMETHING SPECIAL NEXT WEEK!!!!

I’ll give you a hint!! If you tuned into our pod pilots, you should recognize this face!!

Let’s go get em!

~DON

substack.meetdonstein.com

https://x.com/donversationz

Www.LinkedIn.com/in/donstein

[Topic] Sharing my Worst-of-All-Time investment mistakes, and recent hiccups, so you don’t make the same ones.

My Worst Investment Loss Happened Last Year from ETH, Never Again.

Today’s newsletter is inspired by the quote I heard on Compound & Friends Podcast with Josh Brown and Michael Batnick:

This famous Wall Street mantra has been molded over the years to imply that a “great investor” is someone who makes a massive, catastrophic mistake early in their career, learns a brutal lesson about risk, and never lets it happen again. If they lose a fortune a second time, they aren’t a great investor.. they are just reckless.

It implies every great investor made a catastrophic mistake, but ensured it did not happen twice.

While my catastrophic mistake wasn’t un-profitable in 2025, it was losing 95% of my annual profits from Etherium in late 2025. Went up 400% on the year in 3 months, and then right back down to only being up 20%. Was still a nice return, but an awful experience I will never do again. I still think about that daily, it’s my chip.

Not Losing This Fund.

So when I first launched this new fund, Thoughtful Directions Capital, I was openly very worried that I was doing the wrong things by having a ‘traders’ mindset. I kept wanting to be a value investor, but I just couldn’t stop trading. I was scared from ETH, and I was running scared every time a stock even sneezed. I covered my Investor 1 vs Investor 2 dilemma back in Week 22.

Well it’s now week 39 or something like that, less than 20 left!!, and I’m happy to say that ever since July 7th I totally broke that Jekyll Ξ Hyde trading mindset. I broke that on July 7th (story for a later time), but from that date I just completely removed the feeling of FOMO from my emotional state when investing in stocks. It’s not come back, and I don’t really know why it would. It’s useless. I optimize only for FOME (fear of moving early). Implying that if I’m not the innovator moving first, I’m probably the unknowing idiot moving last. So I should not fear being first, I should hunt for out of favor, and I should lean in when I’m going solo.

Almost the same hour we approached our new high-water mark, I mis-judged Lulu

New strat is working INCREDIBLE.. but as I learned I’m still human. Capable of not thinking with common sense, as LULU’s been falling apart for years.

As of Thursday (Sept 3rd) I had gotten our fund back to break even. But as I’m writing this on Friday (Sept 4th), gosh, I write this from a place of disappointment as we gave 1% of it back (our worst day ever, and it wasn’t from dumb trading mistakes, it was from incorrect underwriting of a deal I should have known better than to value at a 15x on FAIR pricing targets).

I cannot describe how hard I worked or how proud I was of hitting that break-even milestone. We were consistently beating the $SPY over the course of August, and I was making back all our losses while maintaining 65% cash, and taking minimal risk. It really was beautiful. I touched what it felt like to be a true value investor.

I did it through a very simple method = Investing only based on things being a bargain price, after careful underwriting.

The system fundamentally relies on only two decisions:

• #1 always opting for conservative estimates in all scenarios

• and #2 never buying above ‘fair’ pricing.

When I stick to that discipline, despite how many I miss on the upside, we make money. It’s the key to waiting for your pitch.

I had not made a ‘buying’ mistake in 4-6 weeks.

Meaning, just about everything I had bought over the last month was helping the portfolio go up regardless of bull/bear macro market. And, it was correctly sized and priced within my very stern policy.

It was a thing of beauty to witness. The market was down, we were down less. The market was up, we were close enough to it on either side of it that it was a great day. Then the market would go down, we’d barely move down, or maybe even stay even. We did that every day for ~4 weeks.

On the exact day, nay, the exact hour that our fund got back to break even (I worked so so hard for this) was the same hour that Lemon’s earnings call approached. If you can sense the tone shift, this is where I made a mistake.

New CEO to Save the Day?

I was (and still am) excited by the incoming CEO. She’s proven nothing yet as the LULU leader, but here’s a few things that had me excited.

• #1 She is on the board of three public companies, one of them being Spotify! . She’s been on Daniel’s board for nearly a decade.

• #2 She helped launch Nike Women’s from nothing in the 1980’s (?) to a billion dollar brand.

• #3 Three executives already left this week, the week before she starts. That tells me that she is cleaning up house even before she gets there. And nobody was hired in their place, so she’s going to get in there and hopefully hire some bad ass mojo’s.

But as Ben pointed out to me, he fell for this with Nike.. so watch out.

Current Co-CEO’s Did Their Best, but Not Good Results

The current CEO situation is a mess. The business has been sliding for years, and the most recent effort only made things worse.

They brought in two people from LULU management to be CO-CEO’s.

Let’s start with that issue… if you have two CEO’s… then you have none.

But giving them the benefit of the doubt, I listened to multiple earnings calls.

Absolutely brutal.

Constantly blaming things they don’t control for their lack of performance.

Constantly dropping revenue goals.

Their inconsistency of launches for new successful products seemed to always get blamed on ‘negative social media sentiment’ or ‘bad economy’ or ‘competition.’

Well if it is a bad economy.. then how come your competition are selling so much more?

Their excuses made no sense, and it was clear this was nothing more than a polished up pony show as we await a real CEO to lead.

I figured that the two interim CEO’s would be bad, but not do too much damage. I was sadly wrong.

The stock price, and the revenue, and margins, all paid the price of poor leadership. By the way, I’m not the only one who thinks this.

The Founder of LULU is making the same complains, and tried a hostile takeover to get his company back after watching this clown show unfold.

It’s painful to see the numbers, because as of last week LULU reported a decline of 10% in USA revenue. That’s down from positive 12 months ago, and the Street expected -4%.

So, they really underperformed. That gives very little confidence going into the future quarter.

But…. and it’s an important but! Our CEO SAVIOR starts Sep 8th!!

And this is where I made the mistake.

I categorized LULU as ‘15x = Fair’ when new CEO was not even starting until that following week

The key question I had to answer, which was subjective, about underwriting…. is a FAIR price 10x for this, or 15x for this?

Normally, I have absolutely no issue answering this. I opt to 10x’ing owner earnings unless it’s a truly exceptional business.

It was very clear LULU has about $1.2-1.35B of annual earnings power, and +/- $0 of liquidatable assets over liabilities, so the simple question I asked myself, is this company’s cashflows worth $12B or $18B?

If it’s $18B (that’s 15x), then was a screaming deal trading at $120/share. And I should have ~$75K into it.

If it’s fair price is $12B (that’s 10x), then I should absolutely not have anything invested, and I should be waiting for my clearing price to enter of $101-109, and only enter with $25K.

I made the call just before the earnings call kicked off that I felt this was a 15x. Which was the wrong call, because all bits of common sense tells you this is a 10x’er. However, I over-indexed on Heidi being CEO, thinking her clout on Spotify’s Board, Nike leadership, and removing of prior mgmt was enough of a signal to the market that is turning over a new leaf.

I 100% knew that current management was awful, I knew the quarter was going to be brutal, you could see it in the numbers, and their guidance last Q was negative.

But I discounted the risk of what two part-time co-ceo’s with no prior experience running a company during turbulent Tariff times could handle.. And, I added too much premium to the risk that Heidi was coming in as CEO next week.

It sounded great - but reframing it, she didn’t even start for another week!I
WHAT WAS I THINKING GIVING THIS 15X AT FAIR VALUE..

That’s a brutal set up to get this wrong in my system, because it is straying from my two fundamentals I covered at the start of this writing today:

I broke rule #1 by giving benefit-of-the-doubt. I should NOT be paying for hope, a great investor only pays for proof. By breaking rule #1, I then caused myself to over-extend and break rule #2 since the goal posts for ‘fair’ were on the wrong side of the field.

Upset with myself.

My internal voice was also screaming at me prior to all this, you can see from my text this was by biggest flagged worry, but I talked myself out of it being a risk because ‘whatever, the NEW CEO will save us! She deserves a valuation premiums today!’

So silly. I should have waited.

I watched 100’s of pitches fly by, and only swung at a select few this past 6 weeks.

It was a completely new investment style, and it changed my returns significantly.

So losing a good portion of the last 2-3 weeks of returns from a mis-categorization of LULU being a higher quality stock than they rightfully deserve, is brutal for me.

As is how it goes…

So without dwelling.. the only question now is, what do we do so that we make money?

The first step, is to codify the rule, print it out, and hang it above my desk.

1 major mistake = 1 major rule. Never to be broken again.

We’re up to 7 or 8 hanging, and the good news is that once they are up there, they do not seem to repeat with any sort of consistency.

This rule involved me putting in a framework for how I select between FAIR being 10 15 or 20x.

More to come in the later Monthly edition of our full portfolio underwriting at end of Sept.

I love to think about all sorts of things. Finance, and also life/education.

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Dear Founders, Investors, and HNWs,

If you’re running a startup, working for corporate, or lucky enough to have a pile of cash, in all scenarios it’s important to compound your wealth.

Stocks are not for everyone, especially individual stock picking.

It’s a skill that requires years of hard lessons, and losing money.

A handful of investors stick through the lows, and realize how lucrative it can be.

So each month, we’re going to pick ONE STOCK and do a deep diver conversation with a hand-selected group of business leaders.

Join the Investor Roundtable

You can find out more details by clicking the above image or link.

Next Monday:

We’re covering either music, or these below Qs as my ‘dedicated’ podcasts hosts delayed our recording today :)

Q1: What’s the key to raising a family?

Q2: How would you fix the USA education system?

substack.meetdonstein.com

~Don

https://x.com/donversationz

substack.meetdonstein.com

September Newsletter Previews

As always, my ideas remain fluid, but this is the general direction we’re heading this month with content. A mix of friends, music, life experiences, and of course, wrapping it up with a heavy deep dive of investing/stocks.

September 7th: “Q1: What’s the key to raising a family? Q2: How would you fix the USA education system?”

[Podcast]

Chase and H are both incredible parents with a large family, Ben and I are not yet, but we grew up with the Midwest lifestyle in Michigan. So we’re going to cover advice and experiences. We’ll spend the entire episode only focused on those two questions next week.

We agreed the other day, “nobody wants to listen to 4 friends talk more about interest rates, Trump, Iran, and all the other stuff that millions of podcasters with no edge continue to talk about...”

So we’re going back to the drawing board of format iteration.

We feel the smart direction is to find something UNIQUE in which no podcast currently offers, or at least not at scale.

My idea is for each of us 4 to present something per episode to the other 3 friends; a business idea, stock, life problem, whatever it is we usually talk about as friends. And then we spend that full episode working through how to help on another with the goal/problem they presented.

Could be cool. and valuable for us and ya’ll. TBD.

Our other format concept, is to select two questions per week, and explore each of them for 30-45 minutes. You can get a preview of this format at the end of this newsletter with a new 1-hour long episode available today.

September 14th: “Bring Ppl Together with In-Person Music”

[Music Experience]

Taught myself to write lyrics over the first 15 years, then learned to produce sounds over the last 5, and most recently I’m learning to bring it all together DJ’ing (for fun).

This past weekend I hosted my first DJ experience (it was just 4 friends, as I’m new to this). But 2 speakers, 100 glow sticks, and a LED mood light set the tone.

The coolest part is I could not do any of this just last week…. it took me <2 hours to learn this so far. I’m a natural!

People keep asking…. YES! I ALSO WROTE, PRODUCED, PERFORMED (then altered my live recording with AI), AND IDEATED EVERY SONG!!!

I’ll also share updates about a ‘songwriter event’ I attended where local artist got on stage to sing what they wrote, then discuss their thinking.

Again, just one of the many activities I’m saying ‘yes’ to without worrying about what might or might not happen. At the same time, I’ve made about 75 songs this year.

Brining that all together, I’m working right now to find a venue to host a 25-50 person ‘music experience’ that will be one-of-a-kind.

September 21st: “From 224 LBS to 180 LBS”

[Fitness]

I’ve been showing up to the gym 3-5 times per week now, for almost 5 years straight. This includes 241 ClassPass classes, and that’s not including most of the spinning and gym sessions I did outside of ClassPass. (receipts below).

During that time I went from a peak weight of 224 with no muscle, to around 180 with muscle. It wasn’t smooth of course, but it proved to me that consistency, not intensity is the key to success. A lesson that was also taught to me in the form of both investing, and dating, this past year.

My only goal for fitness was just to show up; that included some days where I got dressed, drove all the way to the gym, put my right toe in the building and then turned around.

I didn’t work out that day, but I showed up.

In the same spirit, some days I’d drag myself to the gym, fully expecting to just dip my pinky toe in and then leave… Some of those days resulted in the best workouts of my life.

And that is the difference, those days. When you didnt’ want to, and it works out better than expected.

I’ll share some easy strategies I used to keep myself on track, anybody can do it no excuses :)

September 28th: “Returns Before vs After Heartbreak (very good!)”

[Returns + Valuation Methodology]

I’m going to walk through my entire portfolio holdings, explain why I own each company, and how I value the business.

I’ve created a valuation methodology suited for the way I think about companies, which is built on the back of Warren Buffet’s Owner Earnings Methodology, David Swensen Yale Portfolio strategy, and something I’m calling Owner Networth (which helps me separate cashflows value from assets value). My AI system is helping a TON.

Metrics: We care about Owners Earnings, Owner Net Worth, Owners Earnings Expansion Rate. Thoughtful EV (our MC - ONW formula), Owner Earnings Yield (thoughtful EV / OE), Owner Earnings Multiple, RONW Return on Owner NW (ONW/OE).

I’ll dive deeper into this at the end of September, as I’m taking all month to ensure this strategy continues to work at this pace, and at the same time codifying my philosophy as our core investment principles for the fund.

So far, so (very) good.

Fingers crossed.

Watch Last Weeks Episode! 4 Friends, 2 Questions, 1 Pod:

Q1: Is Trump good or bad for USA?

Q2: What is the purpose of life?

We spend about 35 minutes per Question:

Chase: “How do we define good? If we think USA was on bad path, then I think he’s great, yes.”

Ben: “But a counter argument, internally in the USA we are more divided than ever.”

H: “Categorically across Europe you hear negative sentiment in polls for Trump. yet still, Europeans buy American weapons, airplanes, we hold Dollars, we’re not shifting our money elsewhere, we still rely on USA cloud (Amazon for example), every company I ever worked with does. Our kids consume American food, and culture. So, it’s a hard question to answer.”

I did my best to moderate it fairly to get multiple perspectives out there :), enjoy!

~Don & Friends

Www.LinkedIn.com/in/donstein

https://x.com/donversationz

Request an invite to ICC: https://iconic-company-club.donstein.chatgpt.site/#invitation

Missy didn’t have a long resume. She didn’t have academic accolandes. And her longest career was being our babysitter for 13 years, then working with autistic children for the next two decades. Society rarely rewarded her for her kindness. In fact, many cruel people took her for granted. Missy purely lived to help other people, people who otherwise could not help themselves. She saw herself as the last line of defense for them, much like protection she wished she had as a child.

She had almost no money besides what the government and our family helped pay her for work, and yet she was more than willing to spend her last dollar to help brighten the day of a child with autism.

Missy made a massive impact on me because of her spirit. And her unconditional love for me; for the past 20 years of my life she has texted me literally just about every single month checking in on me; my dog, my love life, my family. She was one of my biggest cheerleaders. Today’s newsletter is a special one. Thank you for reading.

Her energy lives on forever, and has vastly improved my life. ❤️

If you are one of the lucky people who opened this, thank you.

I hope it changes your perspective on how to observe the people around you.

I hope it changes your perspective on how to observe the places around you.

I hope it changes your perspective on how to observe the details around you.

Some context

Other than my parents, Missy (who I called “Mip”) was the person most pivotal to my upbringing from a caretaker perspective.

She is sadly no longer with us.

Mip prayed for a miracle: the chance to have a second life.

But it was not Gd’s plan for her.

My response to her was as positive as I could make it.

But we both understood that probability was not on our side.

I FaceTimed her while she was in hospice.

Hours later, she passed away.

Before I come back to writing about Mip, I need to share another piece of the puzzle.

A theme that has been recurring in my life since her passing: “Listen to the universe.”

The concept is simple.

Listening to the universe means becoming aware of the quiet details.

The coincidences.

The people who appear at exactly the right time.

The ideas that keep returning.

The opportunities that feel strangely obvious once you notice them.

I’m only just starting to read it now, but I believe this is also the core theme of The Alchemist.

After Mip passed away, an insane number of coincidences began happening in my life.

Things that felt too obvious to ignore.

Things that felt “shown” to me in a way that pushed my path in the right direction.

I noticed that the more information I collected, the more experiences I had, and the more places I went in person, the more positive impact the universe seemed to have on my life.

And so I decided to take this idea to an extreme.

My month-long experiment

I conducted a little experiment over the past month.

The rules were simple:

No ordering food delivery.

Workout a ton.

Push myself every time.

Show up to workout classes four to six times a week.

Work a ton.

Wake up at 4 a.m. every day, work out and eat by 6 a.m., then grind through the entire day and evening.

And if somebody invited me somewhere, or I saw something happening that sounded even remotely interesting:

Go.

No overthinking it.

No deciding whether it was “my thing.”

No sitting at home because it was easier.

Just show up.

So far, that has included:

• A sound bath on floating mattresses in a pool

• An all-day wellness retreat with two of my buddies that started at 9 a.m. with a fitness class in 90-degree Florida heat, followed by a 130-foot waterslide

• Pottery class, my first time ever

• A singles event, which was embarrassing, but whatever

• Two spin classes in cities different from where I live

• Yoga on the beach, where the sunrise was glorious

• A new style of Pilates using a Lagree machine, where I was probably the only dude who had ever signed up

• Making more than 30 house and rap songs with Suno AI

• Being gifted an entire DJ kit by a friend, then buying the speakers myself for absolutely no defensible reason

• Charity event DOG FOAM PARTY where 20 dogs ran around as soap-blasted into the air

• A second charity event in a barn, electric house music themed

• The list goes on and on… I just said ‘yes’ to anything, and then I made sure I showed up.

The tagline for the experiment became:

“I’ll never know, if I never show.”

And amazingly, while I was doing all of this, something else happened.

I finally found my investment style.

And the fund started working.

Observation is not just a life strategy, it’s the investment strategy

Last week, I had about 35% of our fund invested.

On a ROIC basis, we beat the S&P 500 by roughly ~3%.

And on an ROTC basis, we beat it by roughly 1.25%, despite using less than half of the entire fund.

So that’s half the cash making double the profits.

This means very little unless done over decades.

I know that.

One week of performance is statistically useless.

I am not declaring victory over the S&P 500 because I had a good Friday.

But personally, on a relative basis, and because of the timing, it was momentous for me.

Not because of the return.

Because of how I made it.

I have found a reputable, scalable, deployment style that I feel can scale institutionally.

I had been accumulating deeply undervalued companies through rigorous underwriting using a form of custom earnings calculations that is inspired by all the best value investors.

For the first time in my life, I looked at the portfolio and realized:

I could buy these companies, disappear on vacation for ten years, and not spend the entire trip worrying that my money was going to vanish.

That is what I have been looking for.

I felt like I had taken almost no large-scale risk.

I had kept 65% of my money in cash.

And yet, somehow, I had outperformed more than half of investors.

While also taking less risk.

So we’re doing more of that - because this works.

I’m buying iconic companies at depressed, out-of-favor valuations.

Then I’m scaling into them slowly enough that I preserve plenty of cash for whatever opportunities the market brings me next.

And that last part has completely changed how I experience markets.

Every morning, I wake up and the market gives me a bunch of prices.

I don’t take advice from those prices.

I look at them as offers.

Sometimes Mr. Market shows up at my front door with something ridiculous.

“Hey, you know this incredible business you’ve wanted to own for 9 months…? Everyone hates it this week. Want it for 30% less?”

Sweetheart deal.

Thank you very much.

Other days, Mr. Market shows up with nothing.

That’s fine too.

Because the opportunity will come eventually.

Especially in a market like this, opportunities can appear constantly.

But that will not always be true.

You need a strategy that works when bargains are everywhere and when they are nowhere.

So I go slowly.

Take what the market gives you.

Nothing more.

And definitely nothing less.

The market isn’t the only place I’ve noticed hard work + patience + observation is the key:

The broader theme of my year, across investing, love and life, has become:

Listen to the universe.

I’ve had a frankly ridiculous number of coincidences over the past few months.

Some are tiny.

Some are hilarious.

Some have been so statistically strange that I’ve had trouble dismissing them.

And something changed around the time I lost my babysitter and friend, Mip.

Mip had an unusually powerful spirit.

She was goodness, kindness and caring personified.

She loved me, and I loved her.

Her death made me think more seriously about what any of this actually is.

There was a famous experiment, highly disputed for very good reasons, that claimed to detect a change in body weight at the moment of death.

People sometimes describe it as the experiment that “weighed the soul.”

I don’t pretend that experiment proves anything.

But the underlying question fascinates me.

Einstein gave us the relationship:

E = mc²

Mass and energy are related.

If you rearrange it:

m = E / c²

A tiny amount of mass corresponds to an enormous amount of energy.

That does not scientifically prove that a soul has mass, or that consciousness survives death.

I don’t know that.

Nobody does.

But I find the idea beautiful.

What if what we experience as spirit or consciousness is somehow connected to something deeper than the physical structure carrying it?

Energy does not simply disappear.

And when Mip died, I found myself imagining that whatever made her her (goodness, caring and love) went back to wherever it originally came from.

Back into the ether.

Back into the universe.

I can’t prove that.

But I can tell you something strange.

My life got better.

And it felt as though she was lending a helping hand.

Something changed

Over the weeks that followed her passing, I started experiencing an absurd amount of support from the universe.

Coincidences.

People.

Ideas.

Opportunities.

Stocks.

Everything started aligning in a strangely harmonious way.

Things showed up at exactly the right time.

You can explain every individual occurrence away.

That is the rational answer.

Maybe it was pattern recognition.

Maybe I was simply paying more attention.

Maybe changing my behavior changed the number of opportunities I encountered.

That is entirely possible.

Actually, it is guaranteed at least part of the explanation.

But it does not change the benefit.

Eventually, I stopped caring whether the mechanism was spiritual or statistical.

Because the practical lesson was identical:

Pay attention.

So this month, I decided to take that idea seriously.

Get into the real world.

Show up.

Observe.

Do not force an outcome.

“I’ll never know, if I never show.”

And it has helped basically everywhere.

Life.

Work.

Investing.

Fitness.

Mental clarity.

Confidence.

I feel like I’m moving forward without needing to know exactly where the road turns.

The only thing I’m focused on is observing, listening and acting when the signals become clear.

This mindset is how Warren Buffett invests.

He calls it, “waiting for your pitch.”

It is how South Park is written. They often cram the entire episode together the night before it airs, they procrastinate all week, then pump out the episode literally 24 hours before it’s due to studio for airing.

It is how Kobe practiced basketball.

Mamba spent 99.9% of his life preparing, while the world remembers the 0.1% of the time he spent on the court during a 48-minute game.

He was waiting for his moment far more often than he was capturing it.

The story is the same for many legends.

They worked hard.

They practiced.

They improved.

They observed.

And when they were fully prepared and their moment finally appeared, there was no question in their minds that they would capture it.

If it’s Missy, or just statistics, the Universe is talking

I’m not sure everything is predetermined.

We’ll save that one for another newsletter.

But I increasingly believe there are paths that fit each of us better than others.

And I think finding your route requires a strange combination of enormous effort, and enormous patience.

You have to listen.

You have to observe.

You have to prepare.

And then you have to wait.

Which is exactly how I now think about investing.

I cannot force the market to make an incredible company cheap.

I can spend hundreds of hours studying companies.

I can understand their businesses.

I can understand their balance sheets.

I can know exactly what I’m willing to pay.

I can keep cash available.

But I cannot command the market:

MAKE THIS STOCK CHEAP TOMORROW.

That is not my job.

My job is to be ready when it happens.

And maybe life works more like that than we admit.

You cannot manufacture every friendship.

You cannot manufacture love.

You cannot manufacture the perfect business opportunity.

You cannot manufacture the moment that changes your life.

You can increase your surface area for luck.

You can show up.

You can become better.

You can prepare obsessively.

But eventually, something outside your control has to meet you halfway.

The eye of the tiger

I’ve written before about what I call my eye of the tiger philosophy.

It is easy to confuse patience with passivity.

They are completely different.

I am not advocating sitting on your couch waiting for the universe to DoorDash you a meaningful life.

Quite the opposite.

I am advocating working twice as hard behind the scenes so that when your opportunity finally appears, you recognize it immediately.

Clear the vision in your head.

Know what you are looking for.

Prepare for it.

Then wait.

Like an eagle watching the water.

Most of the time, you do nothing.

Not because you are lazy.

Because there is not a fish worth diving for.

Then one appears.

And you f*cking go.

That is increasingly how I want to invest.

It is how I want to work.

Do not chase every opportunity.

Prepare yourself for the right ones.

Put yourself where interesting things can happen.

Pay attention when they do.

And when something truly obvious finally presents itself, do not hesitate because you have become addicted to waiting.

Take your shot.

“You’ll never know, if ya never show.” (timeless advice…)

BTW…

Missy was an avid reader with you all.. she will be missed! Part of me still hopes that I’ll see ‘opened’ for this weeks edition in the email analytics next to her name!

HAVE A GREAT MONDAY AND WEEK!

Thanks for reading! <3

~Don

https://x.com/donversationz

Www.LinkedIn.com/in/donstein

substack.meetdonstein.com

YOLO.

“I just want everybody to get to know my squad, Remy Boyz” -Fetty Wap

When I was 22 years old living in San Francisco with hardly any credible clue to what venture capital was, nor what Silicon Valley was, nor who the heck Tim Draper was…. I joined Draper University.

It forever changed my life. At Draper U, I made some of the best relationships with friends and mentors I could ever ask for. Four of them are Hemant, Chase, Ben, and Manoj (although Manoj is apparently too cool to show up for the podcast).

So every two weeks, the four (or maybe one day five) of us are getting together for 90 minutes to talk about the world, business, investing, and life.

I invite you to tune in to Episode 2 of the DayOne Pod.

Chase loves Trump, Ben loves Main Street, Hemant loves UK, I love capitalism. Yet we are all very rational and funny. That is what we share in common: a love for entrepreneurship, business, adventure, tech, startups, and conversations about the future. The mix is great together, fun debates, thoughtful points, and I really enjoyed re-listening to the convo (starts at 14:00 once we stop goofing off). We’ve been having conversations like these for almost 10 years straight now.

CONVO TOPICS

1. The Stock Market Is Booming: So Why Does the Main Street Economy Feel So Bad?

12:48–22:45 — skip ahead to the start of our convo, here.

We debate the giant disconnect between a booming stock market and the much harsher reality facing small businesses around the world.

Ben points to the rise in commercial real estate bankruptcies, while Chase and Hemant discuss the global shift in economic power—and whether wealth inequality is truly getting worse or merely feels worse because social media puts everyone else’s wealth directly in our faces.

2. Is Traditional College Still the Best Path?

24:42–32:30

Chase introduces us to Alpha Schools, which leads to a broader conversation about how we should educate the next generation.

Should kids spend years memorizing material they’ll forget…? Or should they be learning trade skills, investing, entrepreneurship, and other crafts they’ll actually use in the real world?

3. The Data Center Boom and the Infrastructure Bottleneck Nobody Talks About

34:00–44:14

Chase shares what he’s seeing professionally inside the data center boom: insane demand for high-value chips, massive development opportunities, and the very real constraints created by permits, electricity, and power infrastructure.

I thought Chase’s insight into the actual bottle neck in datacenter was the most fascinating part of the convo.

4. My Game of Thrones Theory About Oil, War, and American Power

44:20–47:50

I lay out my Game of Thrones-style theory about US energy policy.

What if conflicts involving Iran, Russia, and Ukraine are not only geopolitical battles but also part of a much larger struggle over who controls the world’s energy supply?

And what if America’s long-term strategy is to become the dominant global exporter of oil and natural gas?

And what if this has been a plan in the work for decades?

Sounds like a fun imaginative exercise.

5. Using Fibonacci Retracements to Analyze Tesla Stock, and my thesis on Elon being an Alien

56:06–1:03:52

I show everyone how to use Fibonacci retracements to identify potential buy zones, resistance levels, and sell-off targets for Tesla. I learned these initially from Lance Roberts.

We finish by deciding to track Tesla together and revisit the stock in future episodes… so we can see who was right, who was wrong, and who quietly pretends they never made a prediction.

Bonus: Is the Market Way Too Complacent Right Now?

2:00–11:14

Before the main conversation, I share a video from investment strategist Lance Roberts, who manages roughly $2 billion and believes investors may be getting far too comfortable.

We discuss the unusually low VIX, the market’s current bullishness, and whether the apparent lack of fear is itself a reason to be worried.

How to Watch?

Watch on YouTube:

Watch on X:

HAVE A GREAT MONDAY AND WEEK!

Thanks for reading!

~Don

Www.LinkedIn.com/in/donstein

substack.meetdonstein.com

“I’d rather be generally correct, than exactly wrong..” -Warren Buffett

One critical mistake cost me $50K in upside on a freak occurrence today.

We didn’t’ lose money, but we didn’t make what we rightfully identified as value. Here’s the story…..

—

I was honest when I had the trading issue, and felt that I was ruining the fund.

I’ve fixed that. We’re good. And on the right path, now.

I now feel the opposite of negative. I’m now incredibly optimistic that I’m able to find, identify, and underwrite deals.

Said simply, I feel I’ve proven I can identify value.

What’s value if nobody realizes it? Well…. it is still value.

But what’s profit if nobody realizes it? Well… that is nothing.

In order to conver value to profit, you must have other peopel realize the secret you knew.

SO I knew a few secrets about

The founders were best friends, the biz has 1M verified clinicians on it. I tried to get into the app, would not let me b/c I’m no Doctor.

It’s grown 10% every year for a decade, but guided last Q to only 4% growth.

I looked at everything closely, and said, “this 70% stock decline is not warranted.”

So I set my price targets…

Roughly like this..

My thesis was that it basically had no sellers left, and 17% of shares were Short.

The company is doing $200M of owners earnings, and has nearly $700M of netwroth in the biz.

Let’s assume these numbers are accurate, then by my rules I should have acquired $25K below that $21.16 number. And, it was trading there. So I did.

They reported earnings, and actually re-accelerated growth… from 4% to 7%.

Which would take their PEG from 2.5 to 1.4 if we didn’t update any of the earnings numbers.

The re-accerlation of growth, the stabalization of operating cash flows, and the AI narrative of them competing with Antropic and OpenEvidence on quiality led to a rally. Plus a 17% share short squeeze. It has now settled around 33% up. It probably stops around 20%. But wow. What a ride!

Not to mention, this stock got a sentiment re-rate, and now it probably settles on the high end of 15x not the prior high end of 10x. And that’s exactly what happened. So we just witnessed a true re-rate in real time of a value opportunity. From out of favor, to visible darling.

Eye-of-the-Tiger Investment Philosophy, Starting to Work

Simple. A tiger waits, and waits, until the moment is right, then it leaps.

I did all that.

I had the prey in my mouth, it played dead, then the second I loosened my bite it scurried off. Never to be seen again.

Damn.

But, we are getting so close to becoming extremely great at this. I’m knocking on the door.

Let’s keep pushing! No negativity. These are GREAT signs, I’m knocking on the door of companies I find in a dumpster that then make CNBC front page.

These are good signs of things to come!

And yes, I have the receipts to prove it :/… literally 2 minutes before the explosion.

I’m doing everything I can to rub my face in it to ensure I never forget this.

Just need to now bring this together into a more simplified system integrating the new working-capital rules we’ll deploy/hold by.

I’m seriously encouraged, another 2 weeks of heads down week/weekend work and I think I’m going to have a few of these in the portfolio. But that is NOT for me to decide, if I learned anything, you let the market bring things to you. You take what you’re given, you don’t take more, and as we saw today, you should not take less.

I repeat:

You take what you’re given, you don’t take more, and as we saw today, you should not take less.

~Don

p.s. if you’d like to watch a video of myself trying to break down what went wrong here…. enjoy via this LIVESTREAM LINK.

Www.LinkedIn.com/in/donstein

substack.meetdonstein.com

The real investment skill is being able to strike when the moment is right, and hold on for dear life.

Today’s Article is inspired by this quote:

“Extreme patience combined with extreme decisiveness. You may call that our investment process. Yes, it’s that simple.” -Charlie Munger

Eye-of-the-Tiger Investment Philosophy

What is the definition of my Eye-of-the-Tiger investment philosophy?

Simple. A tiger waits, and waits, until the moment is right, then it leaps.

As Warren Buffett says, “most people confuse action with progress,” highlighting that the real skill of a top investor is being patient when there is nothing to do, and acting swiftly when opportunities poke their heads out like whack-a-deal.

Tigers are solitary stalk-and-ambush hunters. They camouflage, silently close in within 25 meters of prey, and then when the moment is right ***POUNCE!!!**

They overpower victims with their sheer patient strategy.

The tiger might catch one meal per week, the other days consuming, protecting the carcas, and then resting/preparing for the next hunt.

The more I study stocks the more I reframe investing as just the overlap between learning and patience. Just as luck is opportunity meeting preparation. Or just as life is the discipline of using nurture to better nature. The real investment skill is being able to flip between inaction and action when your patience finally pays off.

As Charlie Munger says, “Buffett is really, really good at doing nothing when there’s nothing to do.”

He is not literally doing nothing. He is away learning. But financially he is being disciplined. So it is nothing for the sake of waiting for the right moment, rather than nothing for the sake of laziness.

I love investing because it is so analogous to thinking. The never-ending question of what is the right way to invest and what to invest into matches the bigger question of what is the right way to live and what to do with my time. We invest money into stocks and time into our lives. Both lead to some percentage of those investments being a massive regret. That is unavoidable. Not everyone you give your time to will provide you a return on time, and not every deal you finance will provide you a return on investment.

Separate the concept of “deal” from the result

The real investment skill is being able to flip between inaction and action when the moment occurs. That trigger can only be flipped through intense, genuine, deep learning. Enough learning that you can common-sensically explain the key factors that make this deal a great result or a failed result. And that is the other key point. Separate the concept of “deal” from the result. A great deal can have a poor result, and a bad deal can have a wonderful result. Luck and chance decide those. Even a deal with a 99 percent chance of success can go south once a century.

So the real wrapper of learning and patience is discipline. Discipline waits for something specific. Fear waits indefinitely. Discipline waits because it knows better. Fear moves because it thinks it is missing something.

The watchlist process and the entry price

Great investors win in two areas: the watchlist process and the entry price. All other aspects of the job are tomfoolery. If you have 50 well-studied quality companies on a watchlist through learning, sooner or later they are going to drop low enough to be purchased at a great price through patience. Patience without learning ironically creates impulsive actions because you are basing decisions on real-time information rather than unique insight. Learning without patience gets you a portfolio of 40+ over-excited names with only 55% conviction in each one. Just enough to hold them, but not enough to give you a true edge.

Here is how Morgan Housel put it in The Psychology of Money:

“Investing is not a hard science. It is a massive group of people making imperfect decisions with limited information about things that will have a massive impact on their wellbeing, which can make even smart people nervous, greedy and paranoid. Richard Feynman, the great physicist, once said, ‘Imagine how much harder physics would be if electrons had feelings.’ Well, investors have feelings. Quite a few of them. That is why it is hard to predict what they will do next based solely on what they did in the past. The cornerstone of economics is that things change over time, because the invisible hand hates anything staying too good or too bad indefinitely. Investor Bill Bonner once described how Mr. Market works: ‘He is got a Capitalism at Work T-shirt on and a sledgehammer in his hand.’ Few things stay the same for very long, which means we cannot treat historians as prophets. The most important driver of anything tied to money is the stories people tell themselves and the preferences they have for goods and services. Those things do not tend to sit still. They change with culture and generation. They are always changing and always will.”

That is the heart of it. What price makes this a clear buy? What evidence would prove my thesis wrong? And what am I waiting for, exactly?

When you act without full confidence, you retreat

I am mostly in cash right now. Here is why. Here is my discipline. Here is what would change it. If patience is truly my edge, it should survive through any condition.

Here is my process: search, look, learn, study, and know companies through and through. Here is why I am patient. Because when you act without full confidence then you retreat right at the moment when you should be leaning in more. You should be prepared for that lean-in moment and ensure you are getting a great price to begin with. Here is what triggers action: when the actual price we set gets hit. This should be low and a GREAT price.

Practical framework that keeps me honest

The practical framework that keeps me honest looks like this. Only buy when it is a true no-brainer. Before pulling the trigger I run through these questions:

Great Price?

1. If it dropped tomorrow to my true no-brainer price, would I be pissed I bought today? Stop if yes. Then this is not the price yet. Wait for it.

2. If it ran up significantly from here without me, would I be pissed I did not buy? Stop if yes. No real conviction. You do not want the company. You want the chart.

3. Am I buying because this is truly a great deal at a great price or because I think it will go up? Stop if it is just “it will go up.” That is a bet, not a price.

Investment Style Fit?

1. Did I wake up planning to actively trade or monitor positions today? Stop if yes. You did not plan this. You never want to trade. It is a reaction.

2. What am I trying to achieve or protect by watching the market this morning? Stop if protecting losses. That means you did not buy at a great price.

3. If I had bought at a true no-brainer price, would I still feel the need to actively monitor? Stop if yes. A great price doesn’t have you worrying. You’re proud of the discipline.

Key Question

1. And before any of the above: Have I already done the deep work to know exactly what my true no-brainer price is for this company? Stop if no. Do not buy anything yet. Keep studying.

That is the discipline. That is the great price plus never sell framework that turns the juxtaposition of action and inaction into peace and compounding.

Maybe it is everyone. Maybe it is just me. I have a plan but get pivoted by market conditions I do not control. And then never see the plans fully through. Now that is not a bad thing as some plans would not have seemed to have worked in retrospect. But still there is a pattern. I get an idea off the ground, then cannot monetize it properly. Spatial Collective was my first time properly profitable company out of three. This fund MUST make money.

Clarity of gaze = Win without needing to chase momentum

In order to harden my investor gauge I have been studying like mad and writing privately and publicly. Deep dives because they sharpen my edge. Going deep into Meta, Dave, LNG and others helps a ton with confidence in knowing what I own.

I have a guilt fear of LPs not thinking I work hard because we are not making money yet. But the truth is the market does not care if you look busy. It only cares whether, when the great price finally appears, you have the clarity and courage to act. And I am working so hard. It is just the reward is delayed from effort, and I’ve made plenty of mistakes that have slowed compounding. Dumb mistakes. -_-

To solve it I’ve taken every action I can think of. The one that has worked best so far is opening a second brokerage portfolio, and transferring positions from my ‘buying’ portfolio to a separate ‘hold’ portfolio. The psychology difference of going through the effort to transfer the stock each time makes the bar that much higher to sell it. Hopefully, I don’t sell it. That’s the point. Trust my read, be patient, wait for the business cycle to execute fully.

Being fearful of a great price, because you’re buying it when most others aren’t not... that juxtaposition is not the enemy. It is the entire game. Learning sharpens the eye. Patience protects the calm. Discipline flips the switch at exactly the right moment. And that is how you win without needing to chase momentum.

~Don

Www.LinkedIn.com/in/donstein

substack.meetdonstein.com

The real investment skill is being able to flip between inaction and action.

July 13th - Original Article on X

Does $DECK Clear Our Investment Checklist?

Right now, our portfolio is 3 names; Meta, LNG, Dave. I’m looking to diversify into something uncorrelated as a 4th name.

#1 Does it thoroughly diversify us away from our current 3 watchlist names (PGR, DECK, QCOM)?

• PGR is insurance, Deck is shoe apparel (Hoka, Ugg). Neither should be very correlated to AI. However, PGR is tied to rates, and I believe investors would also correlate this to DAVE. So if rates go up or stay sideways, they both benefit, if they go down they probably get sold off to some extent.

• Qcom is a strong company, but tied to Meta esp. considering Meta is one of their newly taunted hyperscaler customers. We’re already at-weight or over-weight Meta

• You can argue PGR and Dave are slightly correlated since they’re both involved in lending to drive income, so rates matter. (oh I realized I already wrote this, anyways, worth noting)

• Deck likely seems the least correlated to AI. (Unless Robots take over the planet and nobody needs shoes any more)

#2 Does it fit our Checklist criteria?

Out of favor: Qcom probably the most in favor, followed by PGR, followed by Deck as the least favored.

Moat: I’d say Deck probably has the least defensible moat given the nature of their industry. It’s a constant churn to remain on top, or get back to it. Cyclical in that sense; the cyclicality comes from consumer taste.

On a podcast I was listening to today, he said of the Shoe companies he’s aware of he’d “rather own Nike or VF Corp (Northface, Timberland, Vans).”

But comparing DECK to VF Corp... I’m missing it. First off, UGG & HOKA vs NORTH FACE & TIMBALAND & VANS is pretty fair fight. Both Ugg and Hoka have grown YoY for a decade, and most recently HOKA grew 16%. On the other hand, Vans declined revenue ~10% last year... and Northface grew, but 4% less than Hoka. Timabland only grew a standard 6-8%. So what am I missing?

Well, VF Corps’ Alta brand grew 50% revenue. Deck doesn’t have any assets growing at this pace. The market gets excited by that...

Claude says:

“Altra and Hoka are head-to-head competitors in premium running footwear — funny enough, both were founded around the same era of the running-shoe innovation boom, just with opposite philosophies: Hoka is maximal cushion, Altra is zero-drop with a foot-shaped toe box. The scale gap is huge though — Hoka did $2.59 billion in fiscal 2026, up 16%, while Altra is likely in the $300–400M range. But Altra growing ~50% while Hoka decelerates to projected low double digits is exactly the kind of David-taking-share-from-Goliath dynamic VFC bulls point to.

FY26 scoreboard is: TNF growing, Timberland growing, Altra up ~50%, Vans shrinking. Versus Deckers: Hoka +16%, UGG +8%. On pure brand momentum, yes, Deckers still wins — Hoka out-grew everything at VF except tiny Altra, and Deckers has no bleeder like Vans”

Hoka grew “only” 16%, but on a $2.2B base — that’s ~$360M of new revenue in one year, roughly Altra’s entire size

So, for DECK, what am I missing?

After digesting all that... here’s the core of what I’m missing:

Put differently: DECK is a bet that a great business stays great. VFC is a bet that a mediocre business becomes decent. and you’re paying a mediocre-business price for it, with Vans stabilization as a free option on top.

This is a really critically important mindset to understand about markets.

Smart investors, more experienced than I, take the side of VFC. My gut says DECK, because “VFC only becomes cheap on hypothetical FY28 numbers: if they hit the 10% margin exit rate, that’s ~$1B of EBIT, and today’s EV works out to ~9x — i.e., you’d be paying for VFC’s future what the market lets you pay for Deckers’ present.”

DECK has no debt, and consistently performed for a decade on growth. VF Corp is a nightmare on revenue consistency to figure out (VF also sold SUPREME.. which I’d argue is their coolest brand), has debt, and is trading at almost a 50% (!!!) higher TTM P/E multiple.

Ok.. so all that’s to say, I personally would rather own a clean story for DECK at an out-of-favor multiple.

DECK vs. NIKE

But... what about vs NIKE?

Right off the bat, the clear difference in my eyes are brand qualities. Everybody knows Nike. Nobody knows WTF Decker is... and only runners know HOKA. So if I look back at this day in 2035, I can see myself saying, “of course Nike is the strongest shoe brand in the world still! It’s fkc*ing NIKE!”

However, I could also see myself saying, “Incredible what that CEO did with Hoka over a decade. $10B’s in sales, $ B’s in profits, and expanded into multiple diversified shoe categories with consumer name labels.”

Both of those are on the table for now.

Looks like Nike trading about 25-30X owners earnings, and 21 P/E. Where as DECK trades at 15x Owners earnings, and if we factor in EV (fortress balance sheet re no debt), then we’re down to 13-14X.

Roughly 6-8% Yield, plus growing 10%+, plus strong margins/ROIC.

Where have I seen this story before.... hmm..... ADOBE!

And that thing fcking tanked despite the solid fundamentals.

With Adobe, we were asking:

“Will technology permanently change this business?”

With DECK, we’re asking:

“Is this just another fashion cycle?”

If DECK/HOKA becomes a durable global athletic brand - more like Lululemon or Nike than a temporary running trend - the current valuation could prove too low. If HOKA eventually plateaus and UGG keeps maturing slowly, then today’s multiple is probably fair (still think it’s kind of on low end, just bc the growth doesn’t mean the brand is done... they’ve been around since 1980s!!! (I also said this about ADOBE....) Getting some red flags here just based on my mistakes with ADOBE. It’s not that it was a bad biz.. it’s just that the opportunity comes from extreme patience to wait for ridiculous like 7-9x multiple. When the bad news is already fully baked in.

BTW.. good sleuthing online for their tech trends in DECK... looks like they’re thinking about ML and analytics.. but probably behind.

CEO Comps: NIKE v DECK v VFC

Stefano has done great in 2 years. +1

And Bracken is built to turn around.. +1

For VF Corp, this is why Bracken’s hiring mattered

The board wasn’t looking for someone to invent a new apparel category.

They wanted someone who had already proven he could:

• simplify a bloated portfolio,

• improve execution,

• rebuild brand desirability,

• and restore profitability.

That’s almost exactly what he did at Logitech.

By the time he left Logitech as turnaround CEO: Revenue had more than doubled.... Market cap increased roughly 10x!!!

Ok.... but I just looked at VANS website.... my lord help save them. Oye. I cannot figure out what they’re going for. I took screenshots from their website and made this... they’re all over the place.

😂😂 Vans just gave us punk → skater → finance bro → dad all in one shopping page.

Maybe Vans works out.... I don’t think this is a bet I’d believe in enough. However, I’ve been buying UGGs for 20 years... new slippers every year or two... and HOKA for 5-8(?) years... whenever I need a new workout shoe.

So.. for me personally, there’s just now way I could justify buying Nike or VF Corp over DECK. Not when numbers, execution, and personnel beliefs are on one side. I think DECK is a great buy, and if it tanked 25% I’d be all over it. But... it’s still floating.. so let’s now comp it back to QCOM and PGR.

And also, I’ve got to admit that LULU or URBN also have cases to be made for them. And I don’t think I’d want all three.. so I’d need to also deep dive between DECK LULU and URBN. One strategy would be index them now, sell the ones that go up and buy more of the one that goes down. But hm.. I’m trying to run a concentrated simplified portfolio of 6-8 names.

So I think I might be better off examining PGR since I know it the best based on studying the insurance market a lot over 6 months.

But, let’s keep doing the checklist comps for now....

Low + No Debt: Net Debt +5B Qcom, +8B PGR, -1.5B Deck (0% debt-to-equity ratio, that’s a strong quality to have for physical goods company).

Profitable: Qcom 22% NI margin, Deck 18%, PGR 12%

Pricing Power: Price x Volume:

PGR is charging slightly less for new policies but doing more volume, volume is growing 8% YoY. April showed Total policies in force reached 39,767 thousand at April 30, 2026, up 8% year over year, led by growth in direct auto and special lines, and May showed total number of policies in force increased by 8% to 39,970, driven by growth in personal and commercial lines. Policy count growing faster than premiums is a good sign — it means growth is coming from more customers, not just rate hikes, but it also could imply that margins take a slight hit to optimize for overall volume.

DECK showing incredible strength with HOKA. Ugg cash cow. Btw, HOKA largest indie Rival, Brooks Shoes, is a company owned by Buffett. (btw, Nike has more debt, higher multiple, and less consistent operating cashflows).

Qcom’s core biz is in decline b/c Apple is moving in-house, but their Auto is growing crazy fast, 35%, and their handset division should be 1/3 of revenue in the next couple years, that’s a great improvement as they shift into CPU heavy datacenter, edge compute, etc...

Founder Led:

None of these are founder led sadly. VERY Impressive CEO track record from PGR. Tricia Griffith

• Tenure: CEO since July 1, 2016 (~10 years). Joined Progressive in 1988 as an entry-level claims representative — a genuine 28-year rise through the ranks (Chief HR Officer, Claims Group President, Personal Lines COO) before becoming CEO.

• Revenue track record: This is the standout. Progressive’s revenue has grown from roughly $23 billion in net premiums written when she took over to $87.6 billion in total revenue in FY2025 — close to a 4x increase over her tenure. She was named Fortune’s Businessperson of the Year in 2018, just two years into the job, for this performance.

• Stock/scale: Progressive is now the #2 U.S. auto insurer (~16.7% market share) with an

  $125B+

  market cap, up from a much smaller, third-place player when she started.

Other mentions... DECK CEO prev. ran Nike EMEA and Puma as well. He started with Nike in 1993... so shoes are all he knows, and these $5B revenue Shoe businesses are all he’s done his whole career.

Cristiano Amon. Tenure: CEO since June 30, 2021 (~5 years). Joined Qualcomm in 1995 as an engineer, became President in 2018 before ascending to CEO

Theme Decade-Long:

DECK definitely has the ‘athleisure’ trend, and hopefully a get-fit trend. They have 240K participants on their Strava Challenge. Runners love one another.

Zone of Competence:

If you understand whether HOKA’s growth holds up and whether UGG keeps its pricing power, you understand the stock. BUT.. nobody can understand that, and, from the minimal insight I can gleam into HOKA... it appears it’s losing a bit of its grip. But.. I have no clue.. I just cold messaged a run-club on Instagram that kinda know.

You can’t predict the brand success.. but you do know ppl will need to keep buying shoes, and they have some of the strongest operating margins in shoe apparel, plus 0 debt, 1.5b cash, a CEO proving themselves 2 years in a row, and a margin of Saftey on PE.

I think it comes down to LULU v URBN v DECK.

Due Diligence

So... I even messaged Run Clubs on instagram asking about trends, and Hoka momentum. This is the common answer I see online, and in small research sample, ‘had it’s time.’

And the whole thesis on DECK is that it keeps growing 16% YoY rev with Hoka brand. Though, even if it drops to 10% you’d still get your money back in 10-14 years. But... I don’t think I want to own Hoka and Ugg for 10 years. Although, if I think about it, there’s a high probability I’ll still own Ugg in 10 years. I just buy new pairs of the same slippers when they get worn. But Hoka... I actually think the cushion causes more headaches than it solves because they’re not as stable for balancing exercises, and they don’t strap in to bikes/rowers very well (they’re so bulky).

So unfortunately, I think this DECK is a pass for me. And it’s already up 7% since I started writing this article a few days ago. But oh well, I just don’t buy the decade-long trend here.

Checklist

“”No wise pilot, no matter how great his talent and experience, fails to use a checklist.”“ MUNGER

Here’s some notes to myself that I re-read before investing:

You gotta pick. And you gotta pick right.

The point of investing is to always be able to take advantage when prices are attractive

If you wake up and think the market is bringing you opportunities rather than you are giving advice from the market, you’ll be successful

The market is the most abiding thing in the world if you just let it be. Unless it’s a great deal in a great price do not buy it.

The price almost ALWAYS finds its way lower somehow to your buy price. You keep thinking it won’t happen, or you’ll miss it, and you trick yourself into thinking the solution is “just buy it now.” That is a shitty fucking reason to buy something.

Just get to know a COMPANY (not just a moment of opportunity) really really well. Then apply common sense to it.

———

Value is the # if you’re all-knowing about the future and could predict all the cash, discounted at proper discount rate, that is value of a business — in other words the only reason to lay out money now is to get more later on. The cashflows are printed on a bond. Not on a stock certificate.

Warren Buffett’s method: find 1-2 factors that make or break the business, study historical numbers obsessively, and set a simple target — “I want 15% on this investment, day one.” No DCF models required.

~DON

Www.LinkedIn.com/in/donstein

substack.meetdonstein.com

Views

Pretty much every stock I write about goes straight down right afterwards. So do not take this as investment advice, take it as myself trying to learn how to analyze companies.

Meta Platforms, Inc.

👉 This article was originally written July 8th at 3 PM on X.

I feel I have an edge on Meta considering I worked there during the peak of the Metaverse debacle. I should be able to analyze their Datacenter spend better than average, so, here we go…

52-wk Range: $520 – $796

Article Highlights:

1: “DeepSeek can copy model architecture. But... Nobody can copy 20 years of privately collected social-behavior and advertiser-performance datapoints.”

2: “In 2025, ad impressions rose ~12% while price-per-ad rose ~9%. Volume and price up together... the classic pricing-power signal.”

3: “Pershing Square built a ~$2B position (roughly 9-10% of the fund, their biggest tech bet) starting around Nov 2025 at an avg cost near $625/share. In their Feb 2026 investor presentation, they explicitly called it a “deeply discounted valuation for one of the world’s greatest businesses” due to AI upside not being fully appreciated. Druckenmiller, Norges Bank, and JPMorgan all added too I believe. Norges Bank (Norway’s sovereign wealth fund) are a long-term holder with a sizable stake (~1.17-1.2% of Meta).”

Every 90 days on Earnings, we all remember, “Oh! Meta is like the best most profitable business of all time.” And then the other 89 days we seem to watch those profits get thrown into a burning fire pit of money. The Oculus pit. The Over-hire pit. The Metaverse pit. The Datacenter pit is the next investor dilemma.

But IMHO, Datacenters are true monetize’able assets. A VR brick attached to your face is a research project. So given the proven datacenter market, and clear 30%+ Growth for Google/MSFT/AWS Clouds.... I think there’s a much higher floor for Meta’s datacenter spend than most give credit for.

We own this one, and our thesis is simple: this is a wonderful business that periodically goes out of style and then comes roaring back, run by a connected, technical founder who keeps making the right long-term bets (as ugly as it may look, sometimes).

Owners Earnings, Warren Buffett Method Cashflow Stats:

• $124B operating cash flow

• -$20b in D&A, -$25b in SBC... get us an Owners Earnings Cashflow of ~$80B

• At $1.5T market cap that’s 19x multiple

• Vs. Historical norms: Pretty much anything under 20x feels more than fair.

• Being fair — the risk arises from the next 3 years of FCF going to 0. But, given how depreciation accounting works vs cash capex, the Owners Earnings would still remain fairly strong. The argument agains the Free Cash Flow method is… DUH, everyone can see that. And stocks don’t move on obvious. So my initial buy thesis at $605 was based on giving more faith to the FWD Owners Earnings than the rest of the market.

Key Highlights

• The out-of-style / back-in-style pattern is the whole thesis. Meta grew from ~$27.6B revenue (2016) to ~$201B (2025) — a near-8x run with only one down year (2022, -1%). Each time the market declares it dead (privacy in 2021–22, metaverse waste, now AI capex), the core ad machine keeps compounding and the stock re-rates back up. This company has a LOT of leeway..... We’re currently in one of those “out of style” windows.

• A connected, technical founder still at the controls. Mark Zuckerberg founded the company, controls the vote, and has a 20-year record of big bets that looked reckless and then paid off (mobile, Stories, Reels, open-source Llama). Because of Zucks’ age, there’s a chance he could be at the helm for another 30 years as CEO. That would be something special, and vastly supporting the thesis for compounding IMHO. He’s also gotten politically connected this year, bringing on Dina Powell McCormick (ex-Goldman partner, ex-Bush/Trump White House) as President & Vice Chairman.

• Most likely the strongest personal data moat in tech. 3.58 billion daily active people, DMing, liking, etc... ~70% of all active internet users touch a Meta app monthly. The network effect, 20+ years of behavioral data, and advertiser lock-in (years of pixel/audience data, Advantage+ campaigns that improve the longer they run) are essentially impossible to replicate. DeepSeek can copy a OpenAI model architecture. Nobody can copy 20 years of private social-behavioral and advertiser performance data.

• Elite economics, real cash. 82% gross margin, ~41% operating margin, ~30% net margin, and operating cash flow that compounded from ~$50B (2022) to ~$116B (2025) — a ~32% three-year CAGR. For every $1 of net income, Meta generates ~$1.92 of operating cash flow. The earnings are backed by cash, not accounting.

• AI is quietly already paying off in the core. Advantage+ automates targeting, bidding, and creative and already handles

  $60B+

  in annual ad spend. In 2025, ad impressions rose ~12% while price-per-ad rose ~9% — volume and price up together, the classic pricing-power signal. The open-source Llama ecosystem (1.2B downloads) is crowdsourced R&D that flows straight back into the ad-targeting stack.

• Diversifying Revenue Streams. On June 3, 2026 Meta launched Meta Business Agent — the first time it has charged for an AI product — across WhatsApp, Messenger, and Instagram, billed on token consumption / Meta One tiers. This is the “second revenue vector” the bull case needed, attached to a platform of billions of users from a standing start.

Moving away from pure ads, it would be nice to see them mix services from companies via WhatsApp, or Cloud revenue. Personally, I vote they go heavy into Cloud.

Bought at a similar ~20x by quality buyers.

Pershing Square built a ~$2B position (roughly 9-10% of the fund, their biggest tech bet) starting around Nov 2025 at an avg cost near $625/share. In their Feb 2026 investor presentation, they explicitly called it a “deeply discounted valuation for one of the world’s greatest businesses” due to AI upside not being fully appreciated.

Druckenmiller, Norges Bank, and JPMorgan all added too I believe. Norges Bank (Norway’s sovereign wealth fund) are a long-term holder with a sizable stake (~1.17-1.2% of Meta).

Turning Negative to Positive?

Google was being attempted to be broken up when OpenAI launched GPT. And what was the largest threat and worst-case to Google’s business... ended up saving them in court, and gave them new life as a growth stock.

Meta, I foresee, will turn their extreme negative to an extreme positive. They’ll do so by growing a new revenue stream as a Cloud provider. Meta Cloud.

The “Negative”

• The capex is staggering and the FCF dip is real. 2026 capex is guided to $125–$145B (up from $72B in 2025), and a ~$30B+ depreciation wave is about to hit the income statement before those AI investments have generated returns.

The positive twist:

• It took AWS (first mover) 8-10 years to hit $10B

• MSFT took 6-8 years to hit $10B revenue.

• Google took 4-6 years to hit $10B revenue.

• Can Meta do it in..... 2-4 years!?!?!?!?

If the pattern of new entrants eclipsing $10B of revenue continues, it would suggest they could absolutely hit that within 4 years. Which would be wild, but not surprising as long as they start selling... like, yesterday.

Note, all 3 clouds are still growing 20-40%... there’s plenty of Demand for Meta to step in. If they just execute...

Key Risks

AI capex with no (direct) ROI — the central bear case.

• 2026 capex jumps to $125–$145B, nearly doubling, and Reality Labs still burns ~$4–$6B/quarter. A ~$107B step-up in contractual commitments hit in a single quarter. If Family of Apps growth decelerates while losses and depreciation balloon, the “profitable core funds the future” narrative breaks — and the stock gets punished regardless of headline revenue. This is why the stock is off its highs.

Litigation — escalating, not resolving.

• In March 2026 a California jury found Meta and Google liable in a social-media-harm case (Meta on the hook for 70%). The first federal MDL bellwether trials begin June 15, 2026, and Meta’s own 10-K warns these suits could “significantly impact” results, with potential “material loss.” Thousands of consolidated cases hang on these outcomes.

Regulatory overhang — reduced, but alive.

• The big one eased: in November 2025 a judge ruled Meta is not a monopoly, blocking an Instagram/WhatsApp breakup — but the FTC appealed in January 2026, so it’s now at the D.C. Circuit. In the EU, Meta took a €200M fine and a compliance deal rather than a total behavioral-ad ban. Worst cases are off the table; scrutiny is not. I’d also argue there are other potential risks amongst Global and Local govt’s.

Ad-revenue concentration + macro.

• ~97% of revenue is advertising. The revenue floor is unusually strong (10M+ SMB advertisers with no real alternative at their budget), but a tariff-driven recession squeezes SMB ad budgets first, and the Chinese e-commerce category (Temu/Shein, among the fastest-growing spenders) is a concentration risk if US-China trade tightens.

The AI frontier could slip away.

• Meta AI and Meta’s pivot to a closed model (Muse Spark) is unproven. If Meta’s strategy turns out to be a consumer dud, we’ll fully need to rely on Ad rev + Cloud rev to justify the datacenter spend.

• It now appears wise of them to roll their own model, as giving 20 years of data to Claude seems imprudent by Meta.

Btw, Meta dropped a new IMAGE gen model yesterday.. kinda dope!

Random image gen from new META AI chatbot.

Founder key-man / governance.

• Zuckerberg controls the vote, a strength (long-horizon bets) and a risk (no shareholder check if he spends without ROI again, as in the metaverse era). The whole thesis leans on his judgment continuing to be correct. Thankfully, he has a lot of wiggle room given strength of core ad business.

Risk Mitigations

“AI capex with no ROI.”

• This is where the income statement misleads. Add depreciation back and 2026 EBITDA looks better than the NI line suggests. AI is already lifting ad performance ($60B+ through Advantage+) and now has a direct revenue line (Business Agent).

“Litigation.”

• Even a multi-billion judgment is a dent, not a structural break, against a business throwing off this much cash.

“Regulatory.”

• The single biggest tail — a forced Instagram/WhatsApp breakup — was adjudicated in Meta’s favor in late 2025. The EU resolved to a fine-plus-compliance path, not a ban, and Meta is even launching WhatsApp ads in the EU. The remaining items are slow-moving appeals, not imminent existential events.

“Founder key-man.”

• This is the thesis, not a bug. The entire reason to own Meta here is a connected, technical founder with a 20-year record of unpopular bets that worked. We are deliberately betting on Zuckerberg — the mitigant is buying at a price where, even if he’s merely competent rather than brilliant, the business doesn’t lose money.

Margin of Safety

The margin of safety here is business quality plus a modest valuation discount relative to historical norms, and the market.

You always hear great investors say, ‘buy when quality is trading below market multiples.’ This was what led Seth Klarman to buy Google years ago. And seems like smart advice to heed for myself and Meta personally. NFA.

Management & Governance

Founder-led by Mark Zuckerberg — Chairman, CEO, and controlling shareholder since 2004. This is the heart of the thesis. Zuckerberg is a technical founder with a two-decade record of making big, unpopular bets — the mobile transition, Stories, Reels, and open-source Llama — that the market doubted and that paid off. He ended the open-ended metaverse spend when it wasn’t working, which is itself evidence of discipline beneath the bravado. You are explicitly betting on his judgment continuing to be right; his voting control means there’s no one to stop him if it isn’t.

Increasingly connected at the top. Meta brought on Dina Powell McCormick (ex-Goldman Sachs partner, ex-Bush and Trump White House) as President & Vice Chairman in January 2026 — a deliberate move to strengthen political and regulatory positioning. CFO Susan Li is widely regarded as excellent; COO Javier Olivan and CTO Andrew Bosworth round out the team (Bosworth is a watch-item given the metaverse track record, though the underlying tech is strong).

New Top Spot? Leader of Datacenter Biz

Look how Meta’s own blog introduces Santosh.

“At an organization as vast and complex as Meta, it’s hard to ascribe too much importance to any single executive. But it seems fair to say that there are few individuals as crucial to the company’s daily operations as Santosh Janardhan. Appointed head of infrastructure last year, Janardhan is Meta’s top engineering leader, responsible for developing and operating the hardware, network, software, and data centers that all Meta’s services run on. That means keeping everything humming for the more than 3.7 billion people who use Meta’s family of apps each month, while simultaneously laying the groundwork and vision for a highly advanced AI infrastructure to power the company’s products of today and tomorrow”

Later in the article, it then says...

Santosh: We have 21 owned and operated data center regions — each with multiple data center buildings the size of approximately four football fields put back to back. These structures are full of servers. So we have millions of servers, hundreds of thousands of miles of fiber optics. We also have an edge network — that helps extend our infrastructure in places where we don’t have data centers. And all of this is interconnected.

Of course, one of the challenges of operating at hyperscale is managing the inevitable outages and technical issues. The goal is to ensure that the people using our services never experience them. Day in and day out, billions of people use our products. And they’re not just using them nominally. This is how they connect with their loved ones, how they make their living, where they turn to communicate and coordinate services during emergencies. We’re the only hyperscaler that is not a public cloud.”

This line is fascinating.. “We’re the only hyperscaler that is not a public cloud.” We’ll be watching that closely.....

I think he’s a great candidate. Though, would be nice for them to have someone from AWS early days.

Board of Directors

The board includes Marc Andreessen, Patrick Collison (Stripe), John Elkann (Exor/Ferrari), Drew Houston (Dropbox), and Robert Kimmitt (lead independent director, ex-Deputy Treasury Secretary).

On the share register, Ackman (~9–10% of Pershing Square), Druckenmiller, Norges Bank, JPMorgan, and the passive giants (Vanguard ~8.8%, Fidelity ~6%, BlackRock ~5%) have all been buyers.

Financial Picture

^^REVENUE

^^NET INCOME

Net Income is distorted by one-time tax implications, so we’ve normalized those out:

That means, we need Meta to continue to accelerate YoY growth up from that 13% to maybe 17% over the next 3 quarters if they really are going to blow the top off of NI.

Considering their Revenue grew 33% YoY for Q1.... and they’re guiding roughly the same for Q2....

Q2 2026 revenue guidance: $58–61B

...it seems plausible they grow revenue 20-30% this year, and Net Income 15%+ as well. Given all the CapEx spend, those would both be HIGHLY encouraging to see in a ‘down year.’

((Random thought... Not betting anything on these, but they really did truly do a great job with the marketing for Meta Rayban))

Sell Triggers & Thesis Breaks

We buy wonderful businesses and hold for as long as we can; we sell only when the thesis breaks, and trim only if the multiple gets absurd. Specific breakers to watch:

• Capex without returns. And no Cloud layering.

• The AI strategy proves wrong.

• A structural ad shock.

• Litigation goes systemic.

Framing Quotes, and Whether They Actually Apply

“Reversion to the mean constitutes the most powerful force in financial markets.” — Jeremy Grantham

How it applies: This is the thesis in one line. Meta’s whole history is reversion: 2022 crushed it, then margins and the multiple snapped back; today AI-capex fear has it ~22% off highs and near its average P/E (below it, adjusted). If the business keeps compounding and the fear fades, the multiple reverts up — the “out of style → back in style” pattern we’re explicitly buying.

But it might not be true. Reversion cuts both ways. Maybe the ~28–33x peaks were the anomaly and ~20x is the new normal for a maturing, ad-concentrated, capex-heavy business facing real legal and AI risks. The “mean” it reverts toward might be lower than the one we’re anchoring to — and a permanently higher capex base would justify that.

“The main thing to do is find wonderful businesses, buy them, and sit there.” — Warren Buffett

How it applies: Meta clears the “wonderful business” bar by almost any measure: 82% gross margins, 3.58B daily users, the deepest data moat in tech, and pricing power (impressions and price both rising). Founder-led, fortress cash generation, bought at a fair-to-good price — this is a sit-on-your-hands compounder, not a trade.

But it might not be true. “Sit there” only works if the moat is durable. And if I can actually hold on. If AI assistants replace the social feed as how people consume information, or if the frontier-model bet fails, Meta’s attention-and-data moat could erode faster than its 20-year history implies. We’ve never actually seen the feed disrupted; we’re trusting it won’t be on Zuckerberg’s watch.

Value?

1. $1.55T market cap

2. $125B cash from ops

3. $70-80B of owner earnings

4. 19-21x O.E. Multiple

Roughly 5% OE Yield, growing 30% rev, engagement of products also expanding quickly.. and the wild card that puts this over the top would be a successful Cloud business.

They have $240B Equity, about 28% historical ROIC, and are pumping all cashflows back into CapEx. We should see an expanded ROIC if they do cloud correct given the Big 3 all have operating margins above 30%. And Meta could over deliver considering how well AI is working to ad’s already.

I’m optimistic about Meta’s ROIC if they end up monetizing these datacenter with a mix of Cloud and Meta AI... but we need to watch next earnings closely.

Don

Www.LinkedIn.com/in/donstein

https://x.com/donversationz

MSFT lays off 5K employees

High Yield Credit Spreads Remain Tight

Global Markets Barely Move, but lean Red

Market Narrative Catalyst This Week

Monday, July 6 (Today)

• 10:00 AM ET: ISM Services PMI (June) — The big one. Services is ~70% of the economy.

  • Previous (May): 54.5.

    • Consensus hovering 54.0 to 54.3 range.

      • Soft print = growth worries + higher rate-cut odds

      • Hot print = sticky inflation pushback on cuts.

• Fed Governor Waller speech (afternoon) — fresh commentary layered on top.

This sets up as a day to fuel the ‘rate cut vs no rate cut’ narrative.

Tuesday, July 7

• 8:30 AM ET: U.S. International Trade Balance (May)

• Weekly jobless claims.

• Wholesale inventories data.

Wednesday, July 8

• FOMC Minutes (June 16-17 meeting)

  • Highest impact item of the week

  • This is the first minutes under Warsh.

  • Markets will parse every word on inflation path, labor market, and rate-cut timing ahead of the July 28-29 FOMC.

  • Any shift in dot plot thinking or balance-of-risk language moves yields and risk assets fast.

This sets up as a second day to fuel the ‘rate cut vs no rate cut’ narrative.

Earnings Catalyst This Week

• Thursday

  • PEP (PepsiCo) — BMO

  • PGR (Progressive) — BMO

  • WDFC (WD-40) — AMC

• Friday

  • DAL (Delta Air Lines) — BMO

  • H (Hyatt Hotels)

Portfolio Review

: Refueling America’s Strategic Stock Piles

Wether we like it or not, the world is a dangerous place. And the best form of protection is prevention from attacks. That requires all sorts of tech and materials in order to keep us safe on a daily basis.

99.99% of us don’t think about the fact that on a daily basis we would be in harms way if it not for incredible USA intelligence and defense. So my investment into UAMY isn’t a vote for war, it’s a vote for further peace.

There’s a mineral called Antimony. It’s mined in China, South America, etc… almost 0 in USA. And then once you mine the ore, you need to put it into a smelter to refine it.

Why is Antimony important? It’s chemically mixed into ammunition to harden the materials. Antimony is a critical mineral used in munitions, weapons systems, flame retardants, & electronics So I thought to myself, the USA has said our ammunition stock piles are low… meaning big Trump daddy needs to buy a lot more stock piles for the military.

But… China has stopped selling us antimony. And the USA has no way to create it.

So I found the only the main (and essentially only significant) fully integrated antimony mining + smelting/processing company operating in the US right now…. And on a podcast the CEO said, ‘oh yeah I was talking with Don Jr. the other day…’

So I’m like hm….. I bet that Trump is about to buy a ton of Antimony from this company.

The CEO also noted to keep up with demand they’re going to push back renovations on facility so they can keep it operating at capacity.

• They also commissioned expanded smelting furnaces at their new Thompson Falls, Montana facility.

Last week —> They announced a press release that the government is buying 250M worth of Antimony from them… and they just delivered the first 50M. Stock went up 5-10% in value in 2 hours on the news.

$245 million (sometimes cited ~$248M) sole-source, 5-year IDIQ contract with Department of War. IDIQ meaning they can order up to that 250M, not that it’s required. So not as solid as money in hand… however, the contractor (UAMY) gets the sole-source award, which means they’re the only approved supplier for that specific antimony ingot requirement.

• First physical deliveries happened in Q2 2026: ~82,000 pounds of antimony metal ingots shipped.

• Total government orders to date: $57.3 million under this contract.

  • ~$2.6 million invoiced in June from those initial shipments.

So now USA will get our ammunitions inventory back, and this company is basically the only one in the USA as of 2026 that can provide it to us.

Great video if you want to meet the UAMY CEO

They’re also going heavy into Antimony exploration in Alaksa, and expanding into Tungsten (second hardest mineral behind diamonds, used for submarines, tanks, shields, etc..).

Around 2:30-3:00 in that video, Gary says something to the tune of, “we bought a property in Canada last May. And did enough work to get a third party resource report, and it shows $4.6B of future revenues from that property. So we are on a fast track to get that up in operation.”

So their current supply is becoming increasingly more valuable, and, they’re adding alternative revenue sources from other valuable assets and minerals.

Gary Evans, Perfect CEO:Market Fit

Prior to UAMY, Gary was CEO/Founder and scaled from $0 to $2B. He built Magnum Hunter Resources Inc. (MHRI) for ~20 years.

• Founded the company in 1985 with just $1,000 near the bottom of an oil price crash. Built it into a NYSE-listed energy company focused on unconventional resources (Appalachian Basin, Eagle Ford, etc.).

• Sold it in June 2005 for approximately $2.2 billion

Fundamentals Breakdown

Strong Revenue Doubling YoY

This company did $14M in 2024… doubled it to $39M in 2025…. and Gary is guiding for $110M+ revenue in 2026 (doubling yet again).

In addition, the quality of that $110M is supposed to be roughly $60M+ from DoW. Those should be fairly sticky as USA shifts material sourcing/processing from China to on-shore.

On the most recent earnings call, Gary said:

“...I’ve looked very hard at our $125 million revenue guidance for this year. I’m convinced we can do it. And you’re seeing that occurring now with deliveries to the federal government. I would say $75 million to $95 million of the $125 million will be federal government shipments of antimony ingots by the end of the year.

And with the ramp-up that’s occurring now, with the additional inventory we built with additional antimony supplies coming in, I’m highly confident that we can make those numbers.”

So if we rely on that $100M rev, then 10x Sales for a company growing 100% YoY on Revenue seems like a bargain, but ONLY IF, they can double once again in 2027.

Btw, they have no net debt also. And actually have a positive cash position, this is great news for a company who you’d think would be CapEx heavy. I think it shows efficiency. And no preferred stock. Nice set up. Only 100 employees as well. Efficient.

And tangible book value per share has grown nicely.

What are the replacement costs of assets?

1. Thompson Falls / Sanders County, Montana

Antimony Smelter & Processing Facility (Flagship US Asset)

• Only permitted/operating antimony smelter in the US

2. Fostung tungsten project in Ontario

Bought the Fostung tungsten project in Ontario for $5 million in June 2025.

In March 2026, they released a technical report that shows an Inferred resource of 14.62 million tonnes grading 0.17% WO3. Using the tungsten price at that time, they calculated the gross in-situ value (raw metal value in the ground) at about $4.6 billion

• This is an Inferred resource — the lowest confidence category. It’s based on limited drilling and needs a lot more work to prove it’s actually economic. Still…..

The US has produced almost no tungsten domestically for over 10 years. According to the latest USGS data, there has been no commercial tungsten mining in the United States since 2015.

3. Investment/Ownership 10% stake in Larvotto Resources (an Australian antimony/gold company)

They bought the shares on the open market in October 2025 for $37.2 million in cash

He admitted strategic partnership idea is dead, and now he’s just waiting to exit at right price.

Adding it all up: $800M?

I estimate about $150M in tangibles between land, machines, smelters, roads, Govt contract for $240M, etc.

Another $100M in intangibles between Gary’s background, team of experts, Govt relationships, permits, etc..

So $250M in tangibles + intangibles.

And then we need to factor in two more expenses: TIME, and CASHFLOW.

Time

Starting with time, a new entrant would need to gather permitting (air, water, hazardous waste), construction of furnaces, scrubbers, refinery. Securing supply chain feedstock, they’ve had to get around the fact China controls most of Ore supply. So let’s say at least 2 years, likely more. Let’s say $50M worth of time.

Cashflow

Let’s anchor it around Gary’s $125M in 2026. And, the $245M DLA Contract.

DALLAS - United States Antimony Corporation (NYSE:UAMY) delivered its first shipments under a $245 million supply contract with the Defense Logistics Agency during the second quarter of 2026, according to a press release statement.

The company shipped approximately 82,000 pounds of antimony metal ingots in two initial deliveries, generating roughly $2.6 million in invoices issued to the DLA in June. Two additional shipments await government inspection and authorization. The company has received total orders of $57.3 million since the contract began.Investors have responded enthusiastically to the contract progress, with shares delivering a 269% return over the past year and trading at $7.26 with a market capitalization of $1.08 billion. The stock has gained 45% in the last six months alone. Analysts project the company’s price could reach between $11.75 and $14, according to InvestingPro data, which tracks over 1,400 US equities with comprehensive metrics. (https://www.investing.com/news/company-news/us-antimony-begins-deliveries-under-245m-defense-contract-93CH-4770359)

As they become more vertically integrated, they’ll cut into one of their largest cost, which is securing the Ore from all over the globe. Once they can mine it themselves, gross margin at scale (once in-house Montana ore + expanded smelter running) should be 25–35%.

This vastly improves the current Q1 2026 gross margin of only 16%. They’re still stuck on expensive purchased ore. The 23% gross margin level from late 2025 is a good benchmark for what “normal” looks like before the big government contract ramp and in-house production fully hit.

So let’s say this year we do 19% (in the middle), on $125M that’s $23M in operating income. And they spend $25m/year on ops, so it should put the company near break even on Net Income.

Now looking at this from a Cashflow basis…

It’s tough to see it generating more Cash from Ops than CapEx.. so we’ll say FCF negative against next year. Which is yellow flag, but can be justified given they are small company in growth mode to satisfy clear demand.

And if we use Buffet’s Owners Earning logic.. they’re probably doing between +/- $10M away from breakeven.

Then we can back into thinking they have $25M of Net Income in 2027 based on scaling 100% Revenue again.

$525M of market cap. Plus the $300M we valued everything else at.

So maybe you can justify this by the numbers as a $800M company.

Price Action

You can see that in early June it broke below it’s 200 day moving average. That’s when I started acquiring it. I’ve been watching it for ~6 months now. It held strong on the 200 day up until this last month. Why did things change?

It’s also worth noting, the small cap mining ETF also broke it’s 200 day about the same date. So it’s likely an overall sector rotation as hard-assets decrease in demand as dollar strengthens?

UAMY Q1 2026, Missed Revenue, why?

Revenue for Q1 26’ was expected $12M.. yet revenue was reported as slightly down YoY ($6.8M vs $7.0M in Q1 2025), and 50% below expectations. On top of declined revenue, their gross margin collapsed from 34% → 16%.

So how does revenue stagnate, yet margins also get hit:

• Buying inventory = Cash going out to purchase raw ore/feedstock.

• Revenue = Only recorded when they process the ore into finished antimony products and ship/sell it to customers.

So the lag makes this slightly harder to underwrite.

From the official press release:

“Gross margin of approximately 16% ... primarily reflects higher antimony cost per pound sold ... as higher-cost ore moved through cost of sales. Q1 2026 gross margin did not benefit from any of the processing of the Company’s in-house antimony mined in Montana or from any antimony deliveries under the Company’s contract with the DLA. Both of these events are expected to begin contributing during the remaining quarters of 2026...”

Since then, they’ve delivered positive updates (first government shipments, furnace commissioning, etc.), and the stock has been choppy but trying to stabilize in the $7–8 range. Their in-house mining of Montana Ore at Stibnite Hill started April 2nd.. Q2.. and the New Thompson Falls furnaces should be up and running by end of June. So this next Q will see minimal benefit from these assets, though all very very promising.

Based on the work I just did, $800M feels like a fair entry price to me (including slightly recovered margins). It’s at $1.1B right now. So is it 27% above fair price? I mean… fair price is highly subjective.

The real value of this company is the rarity of their solution in 2026/2027.

What UAMY Does That Almost No One Else Can Right Now:

• Full vertical integration: Mine antimony ore domestically → mill/concentrate → smelt/refine into finished products (antimony metal ingots, oxide, trisulfide) ready for ammunition, flame retardants, etc.

• Operate the only significant permitted and operating antimony smelter in the United States (Thompson Falls, Montana).

• Hold the sole-source $245M DLA government contract for defense stockpile ingots.

🫱🫱 If you are an accredited investor, and want to get a full breakdown of my portfolio of 20 positions, submit your email here

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Thanks to all of you who have been supporting this weird newsletter so far! We just passed 100K views for the year.

Shout out to all of you 90+ people who liked this X post of mine:

Thank you as always for engaging! And thank you to Nick and Adam for subscring!

New Readers Get Featured in Next Week’s Edition:

For those of you who care, driving back up to Tampa for another date with her!

And then 5 of my friends are driving up Friday and we’ve rented a BNB for July 4th.

Hoping you all had a wonderful weekend.

In today’s edition we have a few cool treats.

• A 75 minute podcast with myself and my two friends. Hemant and Chase. H and Chase are two of my best friends from Draper University (shoutout Tim Draper and Adam Draper))

• My Good DEED of the week! I helped my house cleaners get a new dog for free!

• Overview of our fund performance this past week (tough week for markets, but I’m optimistic!)

Podcast: Finance Friends, ep. 1

“Chase Builds a Datacenter.”

You may catch our convo here.

Chase lives in Arizona and has strong connections within Real Estate and land permitting.

So he’s the perfect person to be building a new datacenter. He found the power generation partner, and the datacenter operator, and he’s bringing the land and permits.

You can see their rendering below.

Provide a caption (optional)

And thanks to Kinder Morgan ( ) he’s going to have a natural gas supply which enables them to generate power right one site. 100’s of MWs.

You can see the three circular dome buildings are the power generation station, and the smaller units to the left are the cooling racks and GPU units.

Really cool what he is up to! I suggest you watch the episode.

Free Dog, anyone?

Every single time my house cleaners come over (not that often!! I am clean!!!), they play with my dog for 25 minutes. They love my dog.

They always ask me if I ever know where to find a similar type of mini doodle.

Well! I got word of a doodle that needed a home. So we figured out a way to get them a dog for free!!!!

This morning at 9:30 AM we connected them to their new pup, and they all look so happy!

Aw amazing day! :)

Alright Dates, Datacenters, Dogs… enough with the D’s.. let’s start talking M’s!

Fund updates below.

Fund Performance vs SPY

On 6/16 I started tracking myself vs the each day.

I was mostly cash up until 6/16, and then assuming a pullback because of the 10+ week bull run, and because it’s end of Q.. I decided now was my time to take my shot.

And so I’ve been buying the SPY dip.

We formed a double helix.

I made a handful of mistakes this past week. Primarily, bought MU and MRVL and SMCI near the local top. I knew it wasn’t a great price, but let FOMO get the best of me. This has become more rare. That being said, I’ve fully recovered on

, and looking like it’s next.

It was tough... I almost sold.. but rather than panicking out of them... I bought the dip when it felt most painful. I scooped up some MU below $1,100.. which feels like a great move now, but felt awful at the time. And because of that perseverance, it’s canceled out my losses.

However, SMCI just had their office raided by the Taiwanese government an hour ago. So that’s crushed the stock today. If I had not bought more prior to this, I’d be a buyer.

Their growth, Elon partnership, and company history would suggest it’ll be volatile, but worth it for me.

That being said, if this turns out to be worse than I expect, I’ll sadly have to cut losses. But I don’t feel we’re at that moment yet.

-_-

My plan going into the last week was to get ahead of the July 1st re-balancing that wad sure to occur. And, it did. Most hedge funds have allocation requirements, and so at the end of a quarter they must get back to target allocations.

So if they had bought at $195 in April, and it grew to $240 by June 20th, then that profit likely puts them over allocation. Therefore, forced selling must occur at the end of the quarter to rebalance. And since all of Semi’s have run up hard this past Q.. that means a lot of forced selling in tech/semi.

My thesis on 6/16 was to buy that from them. And so, that’s what I’ve been doing all week.

I’m very nervous. But it’s better to buy into weakness than strength IMHO. MU rallied hard today, looks like it stabilized. And I expect MRVL or/and SMCI to do something similar by Weds.

We also have a short trading week, as Thursday is 1/2 day, and Friday is American’s 250th birthday!

Besides my AI mistakes.. I also made some smart moves.

I’ve been in Dave since $240, it’s now $350. And my investment into is seemingly smart now that AI power gen is so necessary. A lot of my other boring names worked also, like + +

Key Lessons

I’ve spent a ton of time refining my investment process, I continue to simplify it.

Leading with common sense, and then pairing it with one main filter, “this is a really great price.”

If I don’t think it’s great, or if I think it’s an ‘okay price’ then just pass. And, wait.

After studying 100’s if not 1000’s of company financials in depth, I’m starting to get a good feel for value. I should be able to make decisions based around, “is this a great price, or not?”

The challenge I got myself in to is that some of the ones I purchased above a great price, have now re-traced to a great price. And so I can either invest more, do nothing and hope it turns up, or cut losses and say that’s a mistake which should cost me.

I’ve made no significant moves in the last few days, because I’m trying to remain Zen. I might’ve paid a bit too much for some of these AI ones, but also if the growth continues, then they’ll all pop on next earnings call.

Arguing with Grok

I was DM’ing my deck to randoms on X, and got temp. banned for ‘spam.’

I then had to argue with Grok for the next 3 days.. aka, argue with ‘customer service’ to let me back on. You have no clue how frustrating it is trying to chat with an AI who will not listen. But we got it done! We are back!!!! FOLLOW HERE!

https://x.com/donversationz

Can’t stop, won’t stop.

~Don

I’m writing this Thursday, but have a second date this weekend in Tampa, so hopefully by the time you’re reading this Monday that will have gone well :)

(Full article available here on X)

Today’s note covers three topics:

1: A poem by James McCrae

2: An update on our fund

3: Insights on Natural Gas and LNG

Email don@virtualrealityinvestment.com or DM me on X with interest to come pitch your stock idea on Friday. I’m working to schedule our second episode on Friday, ping me to join us!

Subscribe now

‘Instructions Before Visiting Earth’ by James McCrae

I heard this poem the other day (featured at the end of the paragraph), and thought it was really quite cool. I wanted to share it with you all in case it resonates.

I believe in a central source of universal knowledge. See theories like Morphic Resonance by Rupert Sheldrake.

In short, he proposes that nature possesses a collective memory. This explains why turtles inherently know to walk towards the water when born.

And this theory applies to humans, it reframes our brains from being thinking machines into being antenna like receivers.

We receive signal from a central source (much like the Cloud and AI).

This poem below hits on that theme.

For all my XR fans out there.. you’ll immediately pick up on some of the jargon.

“3D simulation” and ‘fully immersive.’

I thought it was a cool poem, hope you enjoyed.

Fund Update + Investing Lessons

I took the gloves off.

Realized I was being overly technical and rule-oriented. That’s not my natural state.

I’m in the ring now, but before I get into the strategy, let’s rewind the past few months.

I tried 3 distinct investment styles over the past 12 months, each was a VERY healthy exercise to do.

3 Investment Style Experiments

They were as follows: value-oriented vs policy-oriented vs narrative-driven

1: Can I do a pure play value-oriented buy-and-hold Warren Buffet style?

2: Can I do a disciplined policy-oriented deployment David Swensen style?

3: Can I do a narrative-driven trading practice Stanley Druckenmiller style?

I’ve been really truly putting in the hours of studying all the various styles, and trying them out.

I’ve meticulously built strategies, ripped them down only when I felt it wasn’t for me.

There were three pivotal moments, in chronological order.

1: “ADBE is a value play.”

It’s not.

This is ADBE’s 5 year chart, and it’s still going down.

I looked at the numbers and thought they were superb. Everything a ‘value’ investor looks for.

Strong ROIC, low capital intensity, 10%+ owners earning yield, minimal debt, proven track record over decades.

So many good things.

And then when they reported their numbers this week, which are very strong, it dropped like a rock.

Investors hated it. But I’m a value investor, I thought ‘the market’ should not matter?

Well.. let’s be honest with ourselves, I’m probably an average value investor at best.

I love the principles of value investing, but sitting through a 65% decline for years, while the market rips…. something is off. Obviously, I am not understanding something fundamental.

And this is what I wasn’t understanding: value is subjective.

A company doing $100M profits, growing 50% annually, but trading at a P/E of 100, should still be considered more of a value play than a company doing $5B profits, growing 12%, and trading at a P/E of 10. Wait a minute… that doesn’t make sense!

That is literally comparing a trendy stock I’m watching to Adobe. By all means, the latter is a much stronger company, and on the surface clearly the better investment.

So then… why didn’t it work?

Because beauty is in the eye of the beholder. Value is subjective.

SpaceX is trading at $1.5 Trillion… and losing money hand over fist.

But Elon has fans, and the lure of Space travel triggers imagination.

And capturing imagination seems to hold as much, if not more value, than just today’s numbers.

We can get more into all this, as I have millions of thoughts, but I’ll sum it up by referencing the Efficient Market Theory.

Efficient Market Theory

This basically says that any information available today, is already priced into the stock.

Therefore, you find value by having an insight of the future which differs from the mainstream.

And since stocks are mostly 100% efficient, your returns over time are directly correlated to the delta between your view of the world and the market’s. Finding niche’s enables you to widen that gap.

Speaking of gap…. I also want to note something VERY interesting.

As I’ve been questioning the ‘value investing’ concept, I thought it smart to study the history of accounting.

Primarily asking myself, was it easier for Buffett to find obviously value in the 1960’s than it is today?

GAAP History

The Depression happened, and coming out of it every company had different accounting practices.

What a nightmare.

So the SEC was formed in the 1930’s, and by the 1960’s they had almost finalized rules around Depreciation.

Think about that….. one of the most important fundamental concepts in our accounting system, wasn’t even fully fleshed out until half-way through the 1900’s.

So when Buffet comes onto the scene around that time, his ability to study new concepts creates a massive advantage.

And Benjamin Graham in the 1930’s was able to find value.. because literally there were companies trading below their liquidation prices.

But in a world of AI, internet, X, and speedy information…. not to mention algorithm trading… there is NO way that those same advantages exist today.

And so… you really have to think about… WHAT IS THE MODERN EDGE?

Bringing this all back to Adobe

The stock is missing what I might be now starting to consider the most important aspect of investing in public equities.. Adobe was missing a durable growth narrative.

I will skip over the obvious issues like it’s CEO and CFO have stepped down…

The market can look past that under the assumption they pick a great leader.

But the “durable growth narrative” relied entirely on ADBE accelerating it’s growth.

So when they reported that Net New ARR decelerated for the first time in 10 years….

That breaks all hope for the narrative.

So I’m not necessarily saying Adobe is a bad bet, it’s certainly a more reasonable price than ever before, but that is in comparison to the durable growth we came to expect. If there’s already starting to be chinks in the armor… then investors are pretty smart, and it’s likely this company grows, but never again achieves its 25% YOY growth across all vectors.

The only hope for the rebirth of that narrative is their AI product becoming indispensable, and unable to be copied. Which is a tough sell in a world of vibe coding and pools of AI devs all across the world.

The lesson I took from that = GREAT MODERN INVESTMENTS ARE A MIX OF NARRATIVE X GROWTH NUMBERS.

2: Buffet + Munger Clip

I’ll keep it short. But I heard a clip from the 1990’s where they shared their investment process of identifying value.

Munger said, “we got subpoenas for our staff notes.. but not only do we not have notes, we don’t have staff.”

And the crowd laughed.

But really think about that…..

They just sit there all day talking, reading, studying. They’re not running complicated DCF Excel equations, and they’re not pretending they can be so precise.

As Buffet later says, “I’d rather be generally right than precisely wrong.”

He is looking for things that are so obvious that he doesn’t need a note pad, and he doesn’t need to run precise numbers, because it’s so obviously a good deal.

The discipline to wait for that is what makes Berkshire an iconic brand.

Buffet goes on to explain that he just does basic back of napkin math in his head, and thinks.

The lesson I took from that = GREAT INVESTORS USE COMMON SENSE AS THEIR PRIMARY TOOL FOR DEPLOYMENT.

3: Howard Marks book

I’ve been reading voraciously this year. And so I thought it would be helpful to myself (and maybe you) if I read a chapter from my fave books.

This helps embed the ideas deeper into my subconscious.

My friend Corey said he was cracking up when watching it. I re-watched… and yes it’s a bit more of a comedy show than just a chapter reading.

And when I read the first chapter of Howard Mark’s book, it became quote clear by the end of page 2 (1:30 - 3:41 in the video) that he specifically calls out, and emphasizes, the idea that investing should be intuitive, not formulaic.

Key Topics Covered:

• Introduction to the book (0:00 - 1:29): Introducing Howard Marks and discusses quotes from Benjamin Graham, Albert Einstein, and Charlie Munger regarding the difficulty of investing.

• Investing as an Art (1:30 - 3:41): Discussion on why investing cannot be fully routinized or reduced to simple algorithms because markets are psychological and unpredictable.

• The Goal of Beating the Market (3:42 - 5:35): The creator emphasizes that to achieve above-average results, one needs superior insight rather than just luck.

• Second-Level Thinking (5:36 - 8:02): The core concept of the chapter. First-level thinking is simplistic and superficial; second-level thinking is deep, complex, and considers the range of future outcomes, consensus psychology, and how to position oneself differently.

• Examples and Framework (8:03 - 13:58): The creator applies these concepts to a stock (UAMY), discusses the importance of having non-consensus views, and explains a matrix for understanding conventional vs. unconventional behavior in the market.

• Conclusion of Chapter One (13:59 - 15:35): The creator wraps up the discussion on why first-level thinkers are common, which in turn creates opportunities for second-level thinkers to succeed.

That was the final puzzle piece I needed to hear.

I had been studying and studying and studying and studying for years, I’ve tried so many different styles where I ‘stick to those rules.’

But now I need to let loose.

It’s VERY similar to an athlete who practices all week, but then on Football Sunday they are trained to stop thinking about the technicals, stop thinking about the mechanics, and just go play.

Let nature and flow-state control you.

So that’s what I started doing on Weds.

And also built you all a really incredibly well done, and complex graphic showing the parallels of investing to football. :)

So that’s what we’re doing… letting loose. NO rules.

And ONE goal - make money.

Rather than making my goal to follow the rules.. the only concern should be if this trade/investment/thesis will make money.

I’ve been living by that, and things are starting to feel way more natural.

It is not yet showing in the numbers (although we made more money in 3 days than 2 months), but it is showing in my own flow state.

So let’s hope we can compound this, and continue building our own unique investment style crafted around who I am by nature.

3: Insights on Natural Gas and LNG

This is a long newsletter today. If you made it all the way, good for you!

I just opened the camera and started working-remote live.

It’s basically just me talking through my Natural Gas thesis, and researching (Cheniere Group).

Chenier are the largest LNG exporters in the USA, they bought the prior leader in 2015/2016 when they went out of business.

And you can see by this chart…. that was pretty great timing to get into the LNG export business!

I’ll save my breath since I assume almost none of you made it this far, but watch the video if you want to hear my raw thoughts.

p.s. Email me if you want to Pitch your STARTUP or STOCK Idea at our Friday Convo.

This is a GREAT opportunity to get feedback on your investment pitch from me.

I saw the All In Podcast hosted and episode where four fund managers pitch their Stock ideas like a startup.

I love that.

Like Shark Tank, but you talk your book.

Join us on our Friday livestream where you can pitch your stock pick as if you're on Shark Tank. We'll ask you a handful of questions after your pitch, and hopefully we can all see the value you've discovered! We'll also of course feature links to your social profiles to help you gain followers who appreciate your perspective. Apply here:

I’m looking for the next 2 people who want to pitch their stock on Friday.

Please email me directly if interested: don@virtualrealityinvestment.com

Hard to believe, we’re 50% of the way done with the 365 day exercise! Week 26 out of 52. Maybe we’re finally starting to find our identity :), below is a video interview for you, and an opportunity to pitch in our next one.

There’s also some really interesting data I put together about how Warren Buffett, Bill Ackman, and Druckenmiller weight their portfolio at the end of the email.

Email don@virtualrealityinvestment.com or DM me with interest to pitch your stock idea on video.

Introduction to Sue Ennis, and Video Recap

First off, let’s properly introduce Sue. She’s a legend amongst small-caps on Wall Street.

She’s raised over a billion dollars for North American structured products and small cap companies, transforming undervalued fintech and digital asset companies into multi-billion-dollar entities.

She has held pivotal roles at Shyft Networks, Coinsquare, Voyager, and Invesco.

I was honored to welcome her a second time for our Special Guest feature series — Thank you to for joining us for a LIVE chat last week!

We ended up having 200 live viewers on X thanks to Sue offering to re-stream it to her audience. Excellent!

The conversation is a very unique one. Sue was well ahead of the past few major trends. She was an early investor in Bloom Energy

She was an early bag holder of Hut8 as well.

And was a leading voice in crypto all the way back in 2017.

Said simply, Sue skates where the puck is headed.

She says it on the call, but it’s quite clear she has a knack for identifying under-loved early micro-caps, and helping nurture them to success.

So just wait until you here what she is up to now….

(Hint) I couldn’t stop giggling.

Full video here:

Pitch your Stock

Apply to Pitch your Stock Idea at our June 26th Convo

I saw the All In Podcast hosted and episode where four fund managers pitch their Stock ideas like a startup.

I love that.

Like Shark Tank, but you talk your book.

Join us on our Friday livestream where you can pitch your stock pick as if you're on Shark Tank. We'll ask you a handful of questions after your pitch, and hopefully we can all see the value you've discovered! We'll also of course feature links to your social profiles to help you gain followers who appreciate your perspective. Apply here:

I’m looking for the next 2-3 people who want to pitch their stock.

Please email me directly if interested: don@virtualrealityinvestment.com

Portfolio Construction: Research on Buffet, Ackman, Druck, and more.

My current investor challenge revolves around position sizing.

I’ve noticed Druck, Buffett, and Ackman all concentrate 50% of their capital into top 5 positions.

Druck is just a different beast given he trades options as well, but, still clearly concentrated above 40%. He concen-trades (get it!?)

So we know top investors concentrate heavy in top 5 positions. 10% in 5, 5% in 10.

On a 1.5m fund, that’s 150K x 5, and 75k x 10

I need to learn if they concentrate just in the top 5 then diversity the rest, in which case 75K for 10 is likely too much.

let’s see..

Hmmm. Ok very interesting.

EXERCISE OF PORTFOLIO ALLOCATION THEORY:

Everyone hovers their Top 5 around 40-60%’ish.

Next 5 around 20%’ish.

Rest of portfolio varies between 0-30%.

No matter how you chop it, the moral of the story is that great value investors concentrate highly.

That sparks two questions:

1. what are their top 1 and top 2 position %’s?

2. of the top 5, what was cost basis vs market value?

What are their top 1 and 2 position %’s?

Even zooming all the way in, we still find heavy concentration.

Doing the math of their % in Top 5, vs % in top 1, I’d estimate they concentrate about 30% of their Top 5 Capital into just their #1 position. Which makes sense because in all scenarios #1 is about about 15% of overall portfolio, and on average top 5 capital is 50%. So double the 15% to get zoomed in concentration.

Fund + Top 5 Concentration:

Now the question which remains... how did those Top 5 get there? By expanding or by initial position sizing? Let’s see.

Of the top 5, what was cost basis vs market value?

Bit more tricky to figure out.

So we see Druck’s largest position is a bit of a mess, trim add trim add. Snip snap, snip snap.

But still, overall the trend is from 415K shares to 3K shares. So It’s fair to say, at least for this position, he scaled in over time. 3 years actually. His initial position was about 10-15% of peak, and ending allocation.

Now let’s check Apple and Buffett.

Apple and Buffett. The entire Apple position was bought 2016 to mid-2018, and the single biggest purchase was Q1 2018. After Q3 2018, Buffett never made another meaningful buy

But more specifically zooming in on his initial positing sizing, and scaling, we see he toyed with the idea until he felt the moment was right. Then he intrestingly went in with his two largest buys 1 year and 2 years after first entering Apple.

He started with $1B, almost as if he only moderatly liked the valuation. Then went in big with $10B and $12B buys in Q1 of 2017 and 2018. Almost all of his buying happened in his 4 most active quarters. And, roughly a year after his first initial tiny buy.

Let’s examine one more, my other fave investor, Howard Marks. Marks’s largest is TORM ( ), the shipping company.

Howard Marks TORM position:

This doesn’t help us, totally different beast. He led TORM’s 2015 recapitalization and converted its debt into a controlling equity stake; it only showed up in the 13F in 2018 because that’s when TORM became a U.S.-listed security. So the position was effectively handed to them by a restructuring, and ever since, the story has been distribution, not accumulation

Hm...

Alright, so without going deeper, let’s use common sense to find the moral of the story so far.

Value Investors..........

[1] Concentrate Top 5 (50%)

[2] Concentrate Top 1 (15%+), #2 (10%)

[3] Focus very little capital outside of their Top 10.

Comparing this to constructing a Fantasy Football team.

You have your top 2 Staples up top at QB/RB/WR. I prefer most invested in QB, second most in WR. RB’s are amazing, but durability always a bit of issue. Though, you just want your #2 to be best possible available player in those two roles.

Then, depending on your first 5 key player positions, you orient the rest of your team to fill in those gaps. In case of injury, etc.

I’d think portfolio mgmt is similar in spirit. You orient the rest of your portfolio around diversifying from your top 5 concentration. You first round pick makes all the difference in the world, and your second and third are critical as well. Finding a sleeper undervalued player in the 5-9th round takes a good season to a championship season.

All the same for portfolio allocation. Pick your #1 player, orient the team around that.

If my #1 player is Meta, then I need to be thoughtful about drafting another Big tech in round 2 or 3 given it’ll be harder to find diversity later on in that scenario.

QB - Big Tech

RB1 - These are usually old reliable. Consistent every week. Going to get your points.

RB2 - Either old reliable, but not long term solution. Or, usually younger, potential to become great, but not proven yet.

WR1 - These are usually total stud high flyers. They’ll put up 30 pts in a week.

WR2 - Usually younger as well, these have the potential to turn your team into championships when they work out and help give you two WR1’s.

WR3 - Prefer the rear to be held up by a solid 10 pt / week kinda guy. Gets easier reception points, keeps it safe. Doesn’t wavier far from being consistently slightly above average. Don’t worry about these.

TE - This speciality role almost acts as a commodity. Their value totally depends the game script. But if you have a good one, and game script leans your way, then you’re golden for that week.

If I had to just run the exercise fast off the top of my head:

QB - Meta

RB1 - XOM

RB2 - FSLR

WR1 - CRM

WR2 - INTU

WR3 - ADBE

TE - VEEV

That is soo heavily oriented towards software, or, dependence on AI.

OK, Now back to META.

I’ve gotten far enough along into my research that I feel they qualify for my bar as a clear candidate for #1 slot.

They check all the boxes on my checklist.

And they seem durable:

But, as I said, how do we know how to scale in? Well, if we learned anything from the exercise, it’s more important to be confident that’s your #1, and you don’t need to go big early on. Buff took a year to decide on Apple.

Hm... this is interesting.

“Almost every week there are different companies that come to us from outside asking us to both stand up an API service or asking if we have compute that they could buy from us at some premium to what we’ve bought it at,” he said — adding that “if we get to a point where we feel that we have overbuilt, then that is an option that we have.”

I would love to see a Meta Cloud. But I don’t think Zuck wants to veer from consumer.

We just saw Elon get into the business, it would make total sense to me if Zuck does the same. Mark is great with observing and extending what works.

If you compare Meta to the other Mag 7’s over 5 years.. it’s clear Meta is farthest off it’s ATH.

FWIW, it still looks like by the stochastic it has some way to go down. A 10-15% drop down to its 50 day MA would be iconic.

I’ve got to listen to earnings call, as apparently that’s where he mentions the Cloud concept.

1: ATH FOA engagement

2: Meta AI, super intelligence labs...

3: Customizing own silicon with

Nothing much else interesting.

I want to move on to study others in portfolio. But my gut keeps telling me this is an opportunity more than I recognize.

On that prior earrings call, I see from the livestream stock dropped to $620/share from $670 upon the negative news. And it ended around $630. So that kind of makes me think Meta at $590 is $30 below where peoples gut reaction says it should be.

Let’s listen to the questions portion now.

Yep, first one right on the key topic that matters, ROIC. Zuck stutters....

First one, “Share about the level of investment and the measurement stick for the ROIC of Muse and other products?”

ZUCK (defensive... he should have real metrics for this): “The thing to make sure is that we’re building leading models and products. Our model is build products that can get to 1 Billion people, then focus on monetizing them at scale. We invest in models, convert to products, and then monetize those flagship products. The basic milestones I look at, are technical quality to enable a great product, then second, how is it scaling? and third, how’s monetization and how do we increase profitability? I don’t think we have a precise plan for how each product is going to scale month over month. But we have a sense of the shape of where these things need to be.”

Alright.. he’s glorious on the product hitting 1B users. Let’s test Meta AI then..

I’m going to have them analyze this blog before release...

Not off to a great start.

Yikes.

I’ve tried it 5x, keeps saying ‘something went wrong’

Ugh. This is the reasoning..

Ok it actually sorted itself out.

And caught an error in my math from this article.

So it already added value :)

I’m really curious on business model here. I would use this for free if they can become the most used product.

Wanted to see if Meta AI could code.

It freezes there.

Then I have to manually get it working..

But it is working! Currently, “running a subagent.”

Wow, cool. It coded and executed a live pricing calc for me.

So my takeaway.. this will probably end up as good as Grok, Claude, GPT. It’s nearly already there under the hood, just the UI/UX needs some real work.

But I understand what Zuck is saying as far as, ‘we’re focused on getting this to 1B users.’

This is essentially going to be the Google Gemini playbook. Attach a leading AI free chat service to a giant user base of billions of monthly users. That’s what worked for Gemini.

I bet it works for Meta AI.

And I also feel now that Elon launched a cloud service, Zuck will do the same.

Then he’s executing on the very formidable and profitable playbooks of Gemini (Google) and xAI Cloud (Elon).

Those aren’t confirmed, but if those narratives take hold I think Meta re-rates. But truly, impossible to predict or know.

And I do not think Zuck wants to go cloud, he wants to make META AI bigger than GPT. It’s just hard to imagine it, but how knows, maybe…..

I hope!

~Don

https://x.com/donversationz

I don’t expect a ton of guest, but I’m just curious if anyone cares to use Linkedin still :)

You’re Invited to come meet Sue and chat AI/Energy with Founders and Investors:

Hi Everyone,

If you can’t make the live call, no worries I will share video next Friday!

Hoping you’re having a great start to the week.

With my last business, Spatial Collective, we ran weekly invite-only virtual events with special guest speakers at each one.

I’m going to begin doing this again, but monthly, and slowly ramp up as I find the groove.

This creates two opportunities for you all:

#1 RSVP in the below email and attend our kick-off convo on Wednesday with Sue.

#2 Prepare questions you have about humanoids and electricity/energy, these are Sue’s expertise.

I’ll share more below.

But first, announcements..

Starting next week, I think I’m going to begin sending these emails every Friday instead of Monday, and they’ll be videos instead of write ups. ^.

^{RSVP for Weds Event}

We welcome back, Sue!

Sue was featured in our Week 11 newsletter. March 2nd.

At the time, she was the head of investor relations for Hut8.

Since that time, they are up 150%…..!!

Ugh, I wish I invested.

Since then, she has joined a NEW company.

RSVP to come learn what she’s up to, next.

This new business of hers is even more wild.

The last one was a AI datacenter play.

This new one is AI…. humanoids.

And the company history is going to make you giggle, this is sure to be a conversation you won’t want to miss.

~Don Stein

RSVP HERE