A conversation with Philo

The man behind Philoinvestor answers our questions.

Hi Philo, who are you?

Hi, I am an investor and businessman for nearly two decades now. I have a broad set of interests but investing and everything connected to it has been my main focus and fascination. In fact, these interests have given me advantages and made me a better investor — these include politics, geopolitics, economics, history, psychology etc.

Why did you call your publication Philoinvestor, it seems unusual.

Philoinvestor is a portmanteau word made up by the words philos and investor. Philos is the anglicized form of the Greek word φίλος, which when joined before another word means friend of, or love of. As in the case of philosophy which means “love of wisdom”, philoinvestor means “love of the investor”. Philoinvestor can also mean philosophical investor.

A philoinvestor is someone that engages in investments and decision making using a philosophical, educated and unemotional thought process. The logo is a graphic depiction of the famous “Le Penseur” statue by Auguste Rodin, which means “The Thinker”.

Philoinvestor’s creation was completely organic and serendipitous as I had never consciously planned for it to happen.

I see you incorporate a wide variety of articles talking many themes, could you explain why?

During the March 2020 Covid stock market bottom I was having a conversation with an investor who couldn’t understand why I was buying stocks so aggressively, considering the world was in the middle of a pandemic.

After a long conversation and having offered a number of ideas, concepts and explanations as per the why; I realised it was better to write a small letter to explain my thought process. That first letter was the beginning of Philoinvestor.

Since then, a number of interesting subjects came up and I started to write about them in the same analytical and philosophical way as that first letter. Those ideas, discussions, disputes, misconceptions and differing perspectives serve as the basis of the Philoinvestor mindset essays.

How would you define your investing style, how do you invest?

I am a bottom-up, business-oriented, style-agnostic, generalist investor. Rather than using a top-down strategy that focuses on specific sectors or themes, I use my tools and skillset to 1) uncover equities that may be misunderstood 2) after research and analysis formulate a thesis as to the value of the security and 3) use that intrinsic value figure to take positions in the security, or not.

I don’t care if the company is in shipping, oil and gas, defence, EdTech, online retail and marketplaces or even if it sells auto parts. This is why on Philoinvestor I write about companies on almost every business sector.

However, it’s important to understand that each sector and business model has its own characteristics and peculiarities. There are sectors that are tougher than others, and you must always differentiate between that when assessing business value.

In business and investing you have to be opportunistic — you don’t need to make your money from energy or financials or any sector in specific. A million dollars is a million dollars, and remember, you only have to get rich once!

Can you tell us how you see the opportunity set in 2023?

Firstly, the opportunity set is not in mega-caps. Their valuations are running high right now because real rates are at ~0% because of inflation. This pushes investors to buy the Apples and Microsofts of the world to protect their wealth, resulting in very high valuations. They might do well over a 10-year period but the forward expected returns are not good enough for me.

I see opportunities in companies that were negatively affected from the Covid/Post-Covid/Geopolitical Conflict effects and the macro headwinds that ensued.

For example, all non-profitable tech companies have crashed massively, and in some cases the baby was thrown out with the bath water. Many of these companies are creating value, but just not generating cash at the moment. The market is very short-term and having a variant perception from the market’s current thesis could earn you big returns.

The opportunity set also includes companies that had their margins squeezed from spiking inflation - as they haven’t adjusted their prices or adapted their business models sufficiently.

If you look into retail, many companies had collapsing margins because of increased freight rates and cost inflation. But now freights are normalising and the companies are adjusting their prices allowing margins to recover.

What are some ideas you like currently?

I like Farfetch, Coursera, Wayfair, Avon Protection, ASOS and Valaris. Netflix and Jumbo (the Greek retailer) both doubled recently so they are no longer as big an opportunity, but they still have room to go.

Penneo in Denmark and Virtra in the US are also very interesting micro caps.

Please share one of your pieces.

I think everyone should read So you wanna be an investor? and then move on to the other essays under the Education & Mindset section of Philoinvestor.

Here’s an easy access link to my About page and a list of posts that are now removed from paywall.

Sincerely,

Philo 🦉

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