“Set it and forget it may work for infomercials, but it will not work for your portfolio.”
-Austin Root, Chief Investment Officer at Stansberry Asset Management
Austin Root has one of the best pedigrees possible in investing: a Stanford MBA along with stints at Blackstone, SAC Capital, and funding from Julian Robertson. But he dishes insight that’s as applicable to a new investor as it is to a billionaire like Robertson was.
In this can’t-miss interview, we talk about both strategic and tactical investment decisions – tactical being what investments to buy and when (topics that probably get 95% of the airtime in investing media), and strategic being decisions around asset allocation and asset location – factors that arguably have a great long-term impact on an investor’s portfolio.
Austin’s role at SAM is to straddle both, and says that all investors share the following three goals across their investing lifetimes:
- Capital appreciation
- Capital preservation
- Generating income
We discuss Austin’s criteria for identifying great businesses, which include:
- Attractive margin profiles
- Nice returns on invested capital
- Durable franchises
- Businesses that will be more profitable a decade from now
Then we pivot to Austin’s thoughts on fixed income. He’s not holding a lot of AAA and AA-rated corporate bonds in his portfolios these days. Instead, he’s targeting three bond buckets:
- Short-term US Treasuries (for holding dry powder)
- “Busted” convertible bonds that almost certainly can’t convert, but which, by virtue of being overlooked, offer attractive return profiels
- Private credit
On the equity front, Austin prefers mid-caps, and mentions ball-bearing company Timkin (NYSE: TKR) as one holding.
It seems nearly obligatory to ask an investor like Austin about AI these days, so I did. He shared his four-pronged AI approach:
- LLM model companies (e.g., Microsoft, Google)
- Picks-and-shovels plays like Nvidia (as well as HVAC companies supplying data centers)
- Security firms and data aggregator/data analysis firms
- Companies holding and leveraging proprietary data
My interview with Austin is a wide-ranging interview you don’t want to miss. Click here or below to watch it.
James
This article is for informational purposes only and is neither investment advice nor a solicitation to buy or sell securities. All investment involves inherent risks, including the total loss of principal, and past performance is not a guarantee of future results. Always conduct thorough research or consult with a financial expert before making any investment decisions. Neither the author nor BBAE has a position in any investment mentioned.
