July 28, 2020
Jeremy Deal of JDP Capital Management answers questions from current and prospective investors.
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1:36 “We are worried that the present “seemingly irrational melt-up” of the market portends a serious decline in the near term (1-2Qs out), as the markets seem seriously (more than ever) out of touch with the reality of the world. We are also coming into what should be a pretty brutal earnings season, and we think projections looking 1-2 Qtrs ahead will also be quite pessimistic. These factors would seem to imply that a huge drop in the market is more likely than ever. While we are aware that you avoid timing markets (or try to) we are worried that the handwriting is on the wall this time. Are you thinking about lightening up on capital invested in equities (i.e., taking some profits)? We understand you are not a macro-focused investor, and you are heavily invested in great firms owing to your deep research, but will the micro be trumped by the macro this time around?”
– B&D, Current LP, San Francisco Bay Area
5:17 “Given the fact that you exited four investments during H1 2020, how did you utilize the Survivor & Thriver framework to redefine the portfolio?
a. How did you rank potential new portfolio entrants in terms of risk/reward?
b. How do you measure the benefit of adding a new portfolio constituent compared to adding to an existing holding?
c. What do you do to garner a more deeper and more nuanced understanding of business drivers in your largest holdings?
11:04 How did your largest holdings redefine their TAM (total addressable market) and SAM (serviceable addressable market) during the throes of the COVID-19 crisis?
12:03 What concrete steps can you point to that demonstrate the ability of your portfolio holdings to protect their rapidly growing earnings power?”
– A.W., Prospective LP, London
13:54 “You have evolved quite a bit in your investment strategy to where you are now. What would you say was your biggest shift in perspective to get to where you are today? What are the most valuable key traits that you look for in the leaders of the companies that you choose?”
– A.C., Prospective LP, Texas
17:17 “This is great output for first part of the year. What is your plan to hedge for the downturn everyone is expecting?”
– G.W., Current LP, Indiana
18:47 “Are we worried what happens to the market if the US government slows down stimulus money in the next few months?”
– B.C., Current LP, Los Angeles
19:50 “Would be very curious how you think about the valuation of companies such as Spotify or square who have been on an absolute tear recently. Is there a growth rate model you use or any other framework to guide your evaluation?”
– J.D., Prospective LP, Singapore
23:01 “Curious why you sold SATS.”
– E.T., Prospective LP, San Francisco
24:49 “I am enquiring on the case filed against Brookfield Business Partners (BBU), has this progressed somehow / still on track notwithstanding the difficulties brought by the current new normal?”
– J.C., Prospective LP, Singapore