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

Episode Summary

Executive Summary: The conversation explored Evan Tyndall’s investing philosophy at Bireme Capital, rooted in poker-style logic, cognitive bias detection, and a flexible long/short framework. He described how he finds mispricings through screens, eclectic research, and situational “trick questions,” then focuses capital where the risk/reward is best. Case studies included Disney, Meta, Boloré, Cracker Barrel, and Japan, with emphasis on valuation, portfolio construction, and psychology.

Main Topics: Origins in poker and first-principles thinking (Priority: 5/5): Evan explained that poker taught him risk, edge, bet sizing, and logic-driven decision-making, which translated naturally into value investing and later long/short portfolio management. Cognitive biases as a source of mispricing (Priority: 5/5): He argued that market inefficiencies often arise when investors share the same mistaken framing, ignore a stock for non-economic reasons, or extrapolate recent trends too far. Idea generation and research workflow (Priority: 4/5): The process is eclectic: screens, reading other investors, studying competitors, tracking earnings-driven moves, and staying alert to unusual situations rather than relying on one rigid source of ideas. Position sizing and portfolio construction (Priority: 5/5): Evan emphasized rank-ordering expected IRRs, diversifying by risk type, and sizing positions by conviction while acknowledging sizing remains more art than science. Deep dives into key investments (Priority: 5/5): The discussion used Disney and Meta as examples of buying into hated but structurally strong businesses, and Boloré as a case of persistent sum-of-the-parts discount with repeated value-unlocking actions. Shorting philosophy and risk management (Priority: 4/5): Shorts are used selectively, often when stocks are grossly overvalued or the market has stopped caring about valuation; he discussed the dangers of meme-stock squeezes and forced losses. Japan and other global opportunities (Priority: 4/5): He highlighted Japan’s governance reforms, cash-rich balance sheets, and hostile-bid potential as a major opportunity set, especially in small caps that remain underfollowed.

Key Arguments: Poker is a useful training ground for investing because both require identifying edge, sizing risk correctly, and using logic rather than superstition. Statistical value investing is cyclical; even if it’s not always structurally dominant, periods of extreme neglect can create strong opportunities. Mispricings often happen when the market is collectively biased or distracted by emotionally charged narratives. Idea generation is not the bottleneck; the real challenge is deciding what deserves time and attention. Starting with valuation is useful because it provides a reference point that can later be probability-adjusted as new information arrives. Position sizing should reflect both expected return and correlation/risk overlap across the portfolio, but there is no mechanical formula that guarantees correctness. Disney’s direct-to-consumer assets and parks business create a structurally stronger opportunity than the market implied during the sentiment collapse. Meta’s selloff was driven more by margin fear and reality labs spending than by a broken core franchise, making it attractive on normalized earnings power. Boloré remains compelling because repeated corporate actions have tried to crystallize value, yet the stock still trades at a large discount to sum-of-parts. Japan offers a broad opportunity set because governance reforms, cash-rich balance sheets, and M&A/higher shareholder returns can unlock value even without deep operational improvements. Shorting works best when valuation is ignored or the market’s enthusiasm detaches from fundamentals, but meme stocks can overwhelm even good analysis.

Data Points: Bireme Capital cumulative return since inception: 388% net - Stated versus S&P 500 190.7% since inception S&P 500 cumulative return since inception: 190.7% - Comparison benchmark for Bireme Capital Bireme Capital annualized return: ~22% - Since inception S&P 500 annualized return: 14.3% - Since inception Disney revenue (2018): $60 billion - Compared to current revenue in the discussion of direct-to-consumer growth Disney revenue (current): $90 billion - Illustrates growth despite market cap being roughly unchanged since 2018 Disney DTC subscribers domestically: ~60 million - Part of the thesis that Disney could monetize streaming at scale Disney DTC subscribers internationally: ~60 million - Part of the thesis that Disney could monetize streaming at scale Disney DTC margin target: 20% - Evan’s rough future margin assumption for the DTC business Disney earnings power estimate: ~$5/share now; potentially ~$10/share in a few years - Normalized earnings argument Meta margin rebound: +1,000 bps - Core business operating margin recovery from 2022 to 2023 Meta valuation during selloff: ~5x EBIT - Illustrated how cheaply the core business was trading Boloré share-price range move: €6.23 to €5.47 - Trading down on French election concerns despite stable underlying asset value Bolloré sum-of-parts estimate: ~€16/share - Evan’s estimate versus much lower market price Bolloré market cap range: ~€6-7 billion - Referenced as an economic share-count-adjusted valuation context Vivendi enterprise value (2016): ~€22 billion - Historical example of value hidden inside conglomerate structure Universal Music Group market cap today: ~€50 billion euros - Used to illustrate crystallized value from Vivendi/Bolloré actions Bolloré tender offer: 100 million shares for ~€500-600 million - Example of shareholder value creation actions Portfolio weight examples: ~7-10% large positions - Typical sizing range for core holdings like Disney Meta position sizing: Started around 10%; eventually >10% at the bottom - Illustrates incremental averaging into a declining stock Long exposure: ~130 - Gross long exposure mentioned in the shorting discussion Short exposure: ~40 - Gross short exposure mentioned in the shorting discussion Cracker Barrel debt: $1.2 billion reported debt - Bloomberg number discussed, with much of it believed to be leases Cracker Barrel actual debt: ~$400 million - Distinguished from lease liabilities Cracker Barrel EBITDA (2022 reference): ~$400 million - Used to argue leverage could look manageable if margins normalize Cracker Barrel valuation during COVID: ~6x earnings - Example of a stock Evan found inexplicably cheap at the time Yum China revenue growth: ~30-40% up in dollars vs 2020 peak stock down ~50% - Used as a potential opportunity in China Takisawa machine-tool deal: Flat double in a day / six months - Japanese hostile bid example Takisawa valuation: ~5x EBITDA - Explained why the hostile bid made sense economically

Pivotal Quotes: "I don't invest on a purely statistical basis, but I think the value of that is cyclical." — Evan: Explaining how he blends statistical value with situational understanding "Ideas are really a dime a dozen. And it's about flushing them out, figuring out what's sound logic versus faulty logic or no logic." — Evan: On the real challenge being research quality and prioritization, not idea scarcity "The hardest thing in investing is just trying to figure out where to focus your time." — Evan: Describing the true bottleneck in a world of abundant information

Implications: Listeners should focus less on endless idea hunting and more on bias detection, valuation discipline, and portfolio sizing. The discussion also suggests global value pockets—especially Japan and select hated large caps—may offer asymmetric opportunities if governance or sentiment shifts unlock them.