Evan Tindell (Bireme Capital): The Psychology of Value Investing (Plus poker and tennis)

Episode Summary

Executive Summary: Evan Tyndall explains his investing journey from poker to value investing and outlines a flexible process built on statistical cheapness, cognitive-bias-driven mispricings, and rigorous portfolio/position sizing. He discusses several major holdings and ideas—Disney, Bolloré, Meta, Japan, and shorts like Costco—while emphasizing that idea generation is easy, but deciding what deserves attention and sizing remains the hardest part of investing.

Main Topics: From poker to investing (Priority: 5/5): Evan describes how winning money at poker led him to think seriously about capital allocation, and how poker's logic/math framework naturally translated into value investing. Value investing as a mix of statistics and mispricing (Priority: 5/5): He argues that cheap stocks still matter cyclically, but the best opportunities come from situations where the market is misled by cognitive biases, ignorance, or non-economic constraints. Idea generation and research process (Priority: 4/5): He explains a highly eclectic funnel: screens, reading other investors, monitoring earnings moves, following competitors, and talking to people, with the main challenge being focus rather than idea scarcity. Position sizing and portfolio construction (Priority: 5/5): Evan says sizing is largely judgmental and driven by IRR rankings, diversification across risk types, and practical constraints around adding to winners and losers. Long ideas: Disney, Bolloré, Meta (Priority: 5/5): He gives detailed case studies of companies he believes are misunderstood or undervalued because the market is overly focused on recent sentiment or temporary problems. Short book and valuation discipline (Priority: 4/5): He explains that shorts are often overvalued names where investors have stopped caring about valuation, with examples like Costco and difficult meme-stock shorts such as GameStop and DJT. Japan and global special situations (Priority: 4/5): He is bullish on Japanese small caps due to corporate-governance reform, cash-rich balance sheets, and a growing willingness to return capital or engage in M&A.

Key Arguments: Poker is a strong training ground for investing because both require probability, edge recognition, and bet sizing. Statistical value can be cyclical; while it may not dominate forever, it is likely attractive again after years of growth-led market behavior. The best long opportunities often come from stocks the market misunderstands due to cognitive biases, not merely from cheap multiples. Idea generation is not the bottleneck in investing; choosing what to focus on and how to size it is far harder. Position sizing should reflect expected IRR, portfolio context, and differing risk exposures, but it remains more art than science. Disney is attractive because its valuation has not kept pace with revenue growth, and its direct-to-consumer segment could become far more profitable. Bolloré illustrates how persistent conglomerate discounts can still be compelling when management repeatedly crystallizes value through spin-offs, tenders, and asset sales. Meta was compelling because market fear over margins obscured the strength of the core business and Zuckerberg's ability to cut costs quickly. Japan offers a broad opportunity set because governance reforms and capital-return pressure are likely to unlock value in cash-rich, overlooked companies. Shorting now often targets names where investors are no longer anchored to fundamentals, making valuation discipline disappear. Meme-stock shorts can be dangerous even when the thesis is sound, because timing and sentiment can overwhelm fundamentals.

Data Points: Beer Me Capital cumulative net return since inception: 388% - Referenced in the intro as the firm's total net return since inception. S&P 500 cumulative return over same period: 190.7% - Benchmark comparison for Beer Me Capital. Annualized return of Beer Me Capital: 22% - Intro comparison for the fund. Annualized return of S&P 500: 14.3% - Intro benchmark comparison. Twitter merger arb sizing: 20% of portfolio - Evan said they put roughly 20% into the Twitter merger arbitrage. Meta position size: 10%+ at the bottom; larger positions generally 7%-10% - He described incremental buying into Meta as the stock fell. Bearish/Bullish IRR target for larger positions: Mid-teens - He said Disney's IRR was in the mid-teens and similar to other large positions. Disney revenue in 2018: $60 billion - He contrasted 2018 revenue with today to show business growth without valuation expansion. Disney revenue today: $90 billion - Used to argue the market cap is roughly unchanged despite significant growth. Disney direct-to-consumer revenue: ~$20 billion - He excluded Hulu Live and described the remaining DTC business as roughly this size. Disney subscribers: ~60 million domestic, ~60 million international - He cited subscriber scale as a basis for margin potential. Disney current earnings: ~$5/share - He estimated current earnings for Disney. Disney potential earnings: ~$10/share in a few years - His bull case if DTC margins reach ~20%. Boloré share price drop on French-election-related selloff: 6.23 to 5.47 euros - He said the stock fell more than 10% while underlying UMG value was unchanged. UMG market cap: ~50 billion euros - Used to illustrate the sum-of-the-parts value within Boloré/Vivendi structure. Vivendi enterprise value in 2016: ~22 billion - He cited this when explaining how much value was embedded in the old structure. Vivendi revenue last year: 10 billion euros - Part of the conglomerate sum-of-the-parts discussion. Boloré operating businesses sold: 10 billion euros combined - He used this to show how much value has been crystallized relative to market cap. Boloré economic share price: ~5.8 euros - Approximate current trading level he referenced. Boloré estimated total value per share: ~16 euros - His estimate of intrinsic value for the conglomerate. Meta operating margin rebound: +1,000 bps from 2022 to 2023 - He highlighted the speed of margin recovery in the core business. Meta drawdown from 2021 peak area: About 50%+ - He discussed buying during the severe decline from above $200 toward ~$100. Portfolio leverage: 130% long / 40% short - He described the current gross exposures. Cracker Barrel valuation in 2020: 6x cash profits / earnings - He referenced it as an example of a cheap, misunderstood business. Cracker Barrel debt: $1.2 billion total, about $400 million actual debt - He noted that a lot of the liability base is leases. Japanese corporate-governance change: Top-down TSE reform campaign - He described Japan's shift toward shareholder returns and capital discipline. Takisawa stock reaction to hostile bid: Flat double in six months / almost immediately on deal price - Used as an example of the value-unlocking M&A dynamic in Japan.

Pivotal Quotes: "I think right now you could probably throw a dart at like cheap stocks and outperform the SP over the next 10 years." — Evan Tyndall: On why statistical value may be cyclical and currently attractive again. "The hardest thing in investing is just trying to figure out where to focus your time." — Evan Tyndall: On why idea generation is easy but prioritization and focus are difficult. "If you look out I mean they're gonna earn roughly five dollars a share now and if they earn a twenty percent margin in the DTC business they're gonna be earning like ten dollars in a few years." — Evan Tyndall: Disney bull case based on direct-to-consumer margin expansion.

Implications: Listeners should take away that long-term edge comes less from finding ideas than from understanding mispricing, sizing risk intelligently, and staying disciplined through volatility. The conversation also suggests renewed opportunity in cheap value, Japan reform stories, and selective special situations.