← The Master Investor Podcast with Wilfred Frost
The Master Investor Podcast with Wilfred Frost
Freddie Lait: Patience Pays - Lessons From Building a £1bn Business
00:34:37
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- [00:00]
A
I think it all boils down to sort of knowing yourself. I truly think there are hundreds of different ways to make money. You know, Cathie Wood and I may have very different opinions on thematics and the market could both be highly successful. It really comes down to knowing yourself, what suits you, your temperament, what suits the way your brain thinks, and really doubling down on building a repeatable process around what really gets you going and what you can really manage within your, your own psyche. Because it's very emotional as much as it is financial and logical.
- [00:34]
B
Welcome to the Master Investor Podcast with me, Wilfred Frost, where we celebrate and learn from the success of the greatest investors, business leaders and politicians in the world, giving you, our listeners, the edge. My guest today is the founder of Latitude Investment Management and the portfolio manager of their two funds, Latitude Horizon and. And Latitude Global. And he is my very good friend as well. Freddie Lait. Welcome to the Master Investor Podcast.
- [01:02]
A
Thank you very much for having me, Freddie.
- [01:04]
B
So you started Latitude Amazing a decade ago, 2016, and you've crossed a billion pounds in AUM recently. So enormous congratulations on that. That's following your career at Goldman Sachs, Rothschild and Odi, what's the experience been like of leaving the security, the certainty of those big storied financial firms and going out on your own?
- [01:30]
A
Yeah, look, it's been a hell of a journey. It's been pretty tricky. Raising the business up from 10 million in AUM when we started, as you say, through a billion now has been a real fight to get people to pay attention to the way we do things. But I think what it's given us on the other side is the investment freedom to run the portfolio how we want to. So you, you had the security in the bigger firms, but you're always pinned in with some sort of institutional imperative to do it their way. Whereas once you really realize the way you want to do things, you need to create an environment for that freedom. And I think that's what's shone through. And hopefully that's what our clients and partners have found as we've grown over the last decade.
- [02:07]
B
So what is that investment process that you're free to pursue?
- [02:11]
A
So on the equity side, for us, it simply says that really the way you make money out of investing in stocks is if the stocks grow their own ability to generate profits, cash flow and earnings per share. So looking at a stock and saying it should be worth 20 or 30 times earnings, we think slightly misses the point. We say, can we build a portfolio of stocks where we believe the underlying intrinsic value, growth Earnings and profit per share should deliver 12, 15% a year. We've delivered 15% a year in the last 10 years. And if we can do that consistently over time and these companies can deliver that growth, while we're minimizing valuation risk, the price performance should be roughly in line with that. And again, our returns have been around 15% a year for the last decade.
- [02:54]
B
And I should have mentioned the two funds. One is Multi Asset Latitude Horizon, and the other is just pure global equities. Latitude Global. So what are you saying then, in a sense, is that a stock at a premium valuation, you can be okay with that? It's not something that would put you off buying it, provided that the earnings growth underlying is going to come through. Because I think if we snapshot it the last 10 to 15 years, a lot of asset managers have missed some of the great success stories because they were put off by the valuation.
- [03:27]
A
I think the point is that growth is what you're buying. That is where the value is created. And I think this is truer the longer you look to hold a business. If you're owning a stock for 10 years, say, and you buy it on 15 times earnings because you think it's worth 20, you're just going to make 25% or 35% over that period. Whereas if you buy it because you believe it's going to grow its intrinsic value, earnings per share, 15% a year, then it will double or quadruple its earnings over that period, and you will likewise double or quadruple your profitability. So for us, it's the fact that growth is what we're valuing. And then you say, well, if I've got two different businesses, both of which have similar competitive advantages and similar financial outlooks, call it that 15% growth rate, why would you pay 45 times for a business that might deliver that, like Costco or Microsoft or something like that, when you could pay 15 times for a business that should deliver that in something like Tesco's or a number of other stocks like McKesson that we own. And so it's a relative value framework.
- [04:30]
B
I read in one of your investment notes, you said most of the value in investing comes from buying well and waiting. And so it's a patient necessity in all of this.
- [04:41]
A
There's lots of different ways to invest, but I truly believe the thing that's missing in fundamental equity investing, that is people sitting around a table saying, what's this business worth and what's it going to deliver over the next five or 10 years? The missing ingredient is patience. The markets become ever more short term, ever more benchmark aware and really following things quarter to quarter and worrying about short term stock price moves. And for various reasons, I don't believe that short term stock price moves now reflect people like me trading. They're far more mechanistic, much more passive funds. And so if you want real fundamental value to drive your return, you have to take a much longer term view. And the question to us is that we've answered and we believe, how do I build a portfolio in such a way that allows me that patience affords me that patience to wait 5, 10, 15 years for the returns to come through.
- [05:34]
B
So before we get onto some of the kind of current macro and then into some of your individual stocks just to round off the investment process, how hard is it to then sell a stock because simply it's appreciated enough in value. If you still believe in that 5 or 10 year outlook of 15% earnings growth, can it be very hard to say? Actually it's run up too much and the valuation does now put us off.
- [06:00]
A
So I think this is actually where we're a bit better than some others who, especially in the last five years might have got caught out holding onto these premium stocks because of this relative valuation framework. So if you buy a business and it does really well and doubles over 18 months, which has been quite common recently, it may sit on 35 times earnings or 30 times earnings, something quite expensive. Well, we would line that up against all the other businesses we love in the world of, which is around 100 at the moment that we'd love to own and say is that the best use of capital? Is there nothing else we can do with our capital but leave it in that business with that growth rate at that price? And normally there is something far better, maybe trading at half the valuation and we'll just rotate it. And the way we think about it behaviorally is quite important. We don't have to dam that stock. There's nothing wrong with it, it's doing well, it's a brilliant business, pop it back on the shelf, we might buy it again one year. But right now we've got better uses for a capital.
- [06:55]
B
If you've got an example where you've done that well and perhaps one when you hadn't sold it in time.
- [07:02]
A
So one that we did well on was Novo Nordisk. We owned that for three or four years.
- [07:07]
B
This has some of those weight loss drugs.
- [07:08]
A
Exactly. Novo Nordisk is one of two main players in the big weight loss drug craze that's been going on since 2021, I think, and we owned the business. It's a fantastic business. Anyway, it's the global leader in insulin for diabetes and other things. And it went up about 150% in 18 months, which is very, very pretty good move. Pretty good. Yeah. We're pretty happy with that now, obviously, because they announced positive news. Our estimates for the future went up as well. But even when you took that into account, the valuation that we were looking at was more than double some of our other choices. And so we rolled that position entirely into a business I followed for 12 years called McKesson. Also in healthcare, it's a distribution business. Very different model, much more diversified. It was on 11 times earnings. Novo Nordisk was on 33. And after that, for the next nine months, Novo went up 80, another 80, and McKesson probably went up 40. But since then, Novo's down about 70% and McKesson's gone up another 35. So I think that's the really good example of what can happen if you take your money off the table when there's a better relative value opportunity. I think one where we held on a little too long was Diageo. It was trading at a premium valuation coming out of COVID obviously one of.
- [08:23]
B
The big drinks makers in the world.
- [08:25]
A
Exactly. So pretty much the largest kind of spirits manufacturer in the world, still only with a 5% market share. So long run, way to go for that business, potentially. But it had overgrown coming out of COVID We'd had the price inflation, which meant they were charging more for their whiskies and tequilas. But also demand was excessively high. And so there was a premium valuation on a premium earnings number. And that was one that we held.
- [08:48]
B
Onto for too long, as all of us were doing those zoom drinks during lockdown, which became incredibly unhealthy. Anyway, moving on to some of the current macro before we're going to pick your top three or four stocks at the moment later, which I'm looking forward to. Are you concerned about us valuations at the moment, more broadly, something that we discuss pretty much every week on this podcast?
- [09:11]
A
Yeah, it's a bit annoying because I feel like I am in the consensus almost, but I am. I am nervous about valuations. I think there's three major risks facing the market which it needs to overcome. The first is valuations. They are on nearly every metric in their sort of very near the top of their ranges, but also it's very concentrated. And so the two are linked. The AI and tech theme is very expensive and is a large portion of the market in many metrics. Again, the largest concentration in 100 years or at least post war. And they were also earning very, very wide margins, the highest in 100 years. So I look at it and think there's a very big risk that some combination of overvaluation over concentration and over earning come back to earth in the next two to three years.
- [09:58]
B
In terms of the kind of concentration risk, when you see Nvidia, which is obviously the biggest company in the world, over 4 trillion market cap and done unbelievably well in recent years, invest 100 billion in one of its customers in OpenAI, which obviously happened recently, is that a sort of flashing red signal that makes you more than just generally concerned about valuations? Does it remind you of things that have happened before, or is it actually something that could continue for quite some time?
- [10:29]
A
Well, I should say all of those risks I just mentioned, none of them help with timing. None of them historically have given you any indication of where the market will be in a year or two's time. So I think taking a bet against the market on that basis is quite dangerous. But in terms of avoiding the risks, I think it's very key. And I think when you do see things like Nvidia putting huge amounts of capital into a business that otherwise wouldn't have the ability to buy the chips back from Nvidia, it raises quite a lot of red flags with me. And I think the AI story in general, the amount of CapEx, trillions of dollars of CapEx for what currently looks like tens of billions of dollars of revenues and enormous losses, it's difficult at the moment to bet against it, not that we ever would, but because it's disprovable, you can't say whether AI is going to be a success or failure because no one knows what it's going to look like. It is a great technology, it is very exciting. How monetizable and profitable it's going to be is incredibly unknowable. So we would not invest in unknowable places. So we don't own any real exposure other than through our holding in Alphabet, which owns Google. And that's a big differentiator for us not owning those things. But it's not because we're betting against AI, if that makes sense.
- [11:41]
B
And of course, for the Bull case, the flip side argument to Freddie's on the broad AI stuff, then do listen to our other most recent episode with Cathie Wood for the alternate point of view. So just talk us through why Alphabet is in your portfolio then given is it a hedge against having those other ones or outright you find it attractive?
- [12:00]
A
So I've owned Alphabet since 2013. It's always been pretty much in our top 10 for the last 10, 11, 12 years. It's really the ads business, search and the advertising business is a very, very strong monopoly duopoly with Meta. There's been concerns recently that AI will disrupt that in some way. The Stock went down 30% and has since doubled, which is pretty extraordinary for one of the five largest businesses in the world. Tells you how little stock prices really know and we really like the business in general. And I think from the AI perspective, Google were the first ones to invest in AI. They bought DeepMind back in 2014. They laid out internally AI across Translate, YouTube their main search function, both supply side and demand side and it's been embedded in their business for a long time. They have the ability to fast follow. I think the interesting question is if they had the capability, why did they not do it? I believe the answer is because they weren't certain of the monetization ability because it's very expensive to serve. But Gemini is now the top downloaded AI app. I think Google are a very good contender in that space in terms of.
- [13:09]
B
Rounding off the macro. Do you think that recession risks in the US are underpriced right now?
- [13:16]
A
Yeah, I do to a degree. I think a lot of people are trying to buy into stocks on cyclical recoveries. So you're seeing more cyclical consumer stocks in particularly trading at premium multiples of trough earnings in the hope that those earnings recover quickly. I feel like for all the talk in the market about development and employment and growth, the bottom end of the market, the weaker consumers, they've been on their knees for about two years now since COVID unemployment in the youth is very high, clearly social unrest and there's been a lot of pull forward in terms of demand and I think without the big stimulus that's going through and without the big AI investment, I think we'd already be close to a recession in the us.
- [14:03]
B
Let's dive into your portfolio and talk about some of the individual stock holdings. And we were emailing a bit about which ones to focus on before the conversation. We're going to start with Tesco for our US listeners. This is the sort of Walmart of the uk. Talk us through what ultimately they do and why it's one of the key positions in your portfolio.
- [14:24]
A
Tesco's is probably One of the stocks I get the most pushback on, especially from a UK investor base, although the US guys are much more open minded about it. Tesco's is the market leader. 25% market share in UK grocery, very good in online, very good in some of their other angles around advertising and things like that. But basically at its core it's a very large grocer. And the key thing for us in this business is something we look for in every business is what is the real competitive dynamic look like in your space. And we've probably not got long enough. But the long term history here is that Aldi and Lidl, German discounters came and attacked the market 20 years ago. Tesco tried to gouge on pricing and then really lost its contract with the customers. But they fixed that in 2015 and they've been regaining market share since 2019. The key point is that 25% market share is held by Asda and Morrisons, two other competitors, both of whom underwent an extraordinarily leveraged LBO in a 2020, 2021, that sort of period. Very low interest rates are now facing huge refinancing risks and negative cash flow. So their ability to compete and to invest is dramatically diminished. And so what we're seeing is this market share gain coming through Tesco's inflecting higher we believe over the next few years and the business generates 7 or 8% growth even without market share gains. It pays back 7 or 8% a year in buybacks and dividends. So that's nearly a 15% growth without market share. And for every 1 percentage point it gets more market share because it's already got all its fixed assets in place. It makes another 15% growth in the bottom line. So it's highly defensive, it's inflation linked, it's doubled in the last year or two, still trading on 14 times earnings. For your American listeners, Costco obviously nearer 50 and Walmart nearer 40. This business in our opinion will grow faster and is just as defensive.
- [16:14]
B
God has Costco 50 times PE like that. Wow. I knew Walmart had gone expensive again, but I'd missed that on Costco. Talk us through AutoZone.
- [16:25]
A
AutoZone for the UK listeners who won't have heard of it, is an auto parts retailer. So it has stores. It sells to DIY customers wanting to fix up their car, but it also sells to local garages. And it does this very, very quick delivery time to local garages which crowds out any kind of alternative competitors from like Amazon or someone I first invested in them in 2009. So I've owned those shares for 16 years. Again, they've been in the top 10 pretty much consistently for the last 16 years. And for the record, it's generated about a 25% annual shareholder return, all supported by annual earnings growth. And it's a very simple business. It's 85% of its sales are required immediately for repair or maintenance. For your car, something breaks, you need it, you need a wiper blade or you need something like a spark plug. It's essential, it's non discretionary. The car park ages every year by about half a year. Cars get older, the fleet of cars gets larger as well across America. And again, there's three large players in America who have 50% of the market. And the other 50% is very small individual groups of two or three stores locally or maybe even just one store. And they can't compete on the distribution, sourcing, marketing and availability. It's a very hard industry to operate in because you have to have every part for every car of every year in your inventory to be able to serve your customer. So the inventory is very thin and wide and that's a real barrier to entry. So Autozone, we love O'Reilly, is its competitor. That's doing very well too.
- [18:00]
B
Does EVs threaten it or do they help fix EVs? I mean, you just have to have batteries instead of spark plugs.
- [18:07]
A
Yeah. And sort of, you know, door buttons and a few other bits that do work. So there are fewer moving parts in an ev. I think there's a few issues with the EV argument. The first one is where the penetration levels need to get to to actually shrink the internal combustion engine car park, because you can work it through slightly like a population density, you know, how many EVs go in now? Autozone doesn't really start servicing cars until they're about seven years old. And really its sweet spot is seven to 12 years old. So you then got to wait seven years for that impact to be felt across the sector. And what they've shown over time is firstly a lot of sales of diagnostic equipment for EVs which is highly profitable for them, but also an ability to just price up each year. I mean, cars have been getting more complex and less serviceable for the last 20 years. There's some great stats from their 1991 report about people getting worried that AutoZone will go out of business. But I think their ability to price around the demand and the fact that at least for the next 10 to 15 years, it's almost certain the car park will grow. Gives me quite a lot of confidence looking out for the next decade and beyond.
- [19:13]
B
So you're not a buyer of the kind of robo taxi argument that could drastically reduce the need for the number of cars on the road.
- [19:22]
A
I mean it could in one argument. I think the truth is most AutoZone stores are more rural than central sort of city and I think the robo taxi trials, well not trials, they're sort of live but Waymo, a business we own is running, they are good in Phoenix and places like that, but I think they're a long way off. I mean there's hundreds of cars at the moment and there's 200 something thousand million in the car park. So I think in terms of getting there, I just think it would take an extraordinarily long time.
- [19:51]
B
This wasn't by design, but it's very good that we've scheduled this to be after Cathie Wood because again it's a good bull and bear set of arguments on a number of stocks now on robo taxis as well. Tell me about Sony because this is another one you've held for a while and perhaps is misunderstood. You think?
- [20:10]
A
Yeah, I mean Sony's getting better understood. I think just again to sort of tell everyone because people probably close their eyes and think of Walkmans, robotic dogs, VHS players, things like that. And they do still have a consumer electronics business that makes very good cameras, very good TVs and a few other things. And extraordinarily they still sell MP3 players. But if you exclude that business as a kind of break even lab, they refer to it as. Sony is now a market leader in gaming which is a huge structural growth industry. Alongside Microsoft and Nintendo they're a structural leader in pictures, so movies, shows, things like that. They're very, very major player in that globally really through the US It's a US business primarily and the same in music. And alongside those three entertainment assets they have a really, really powerful semiconductor business which is they're called CMOS Sensors and they're basically camera sensors and they have 85% high end smartphone market share. And in as much as EVs do grow or Robo taxis do grow and deploy more cameras or phones, use more cameras per phone, you'll see continued growth in that market as well. And I mean I've owned it since probably 2012 or 2013, so again another decade plus holding period, the stock's up I don't know, 10 or 15 times since then. Still only trades on 15 times earnings and I think the next leg of the story from here is one that they're talking about and is a bit of a Japanese phenomenon at the moment, which is trying to improve returns on capital mostly through improving margins. This business makes just over a 10% operating margin. A lot of the competitors in those media type businesses make 20, and I doubt it gets to 20 anytime soon. But could it be 13, 14, 15? While we also have a kicker through free cash flow growth from the digestion of the PlayStation 5 which was released two or three years ago, I think you've got a really good couple of years ahead for Sony where you'll see natural margin expansion, continued growth in the entertainment assets and Apple refresh cycle. They're Apple's sole supplier for CMOS sensors. And it's just far less of that old fashioned electronics business than people imagine.
- [22:25]
B
Is it though that cheap relative to the big US players? I guess media and entertainment in the US has a big range of valuations like old media, which I guess I work for at Comcast. Sky subsidiary of course of Comcast is pretty cheap. Some of the new media like Netflix is pretty expensive. So how do you think about that comparison?
- [22:50]
A
Well, these guys win because of the new distribution models, Netflix and Spotify and the other alternatives to those platforms. But that sort of model, their existence is the reason the old fashioned media distribution stocks trade less expensively. But I think within the world of content and when you are a really major provider of that content, I mean Spotify and Netflix both basically gave stakes in their business when they were young businesses to Sony just in order to sign them. That's how important their content is. I don't think you could exist without that content on your platform. So it works both ways. But they have a lot of power in those negotiations.
- [23:34]
B
Let's talk about some other asset classes because obviously Latitude Global is just how many stocks in that there's 25, 30.
- [23:41]
A
23 at the moment.
- [23:42]
B
Wow. So it's very focused and then that's just equities and then Latitude Horizon is multi assets within the bond portfolio. Where are you on duration at the moment? What's your outlook?
- [23:54]
A
Yeah, it's sort of the $64,000 question. I think there's two ways to look at it and either one could be true. And this is the reason. And if you say don't judge me by my opinion, judge me by my actions, the punchline is we're in very short dated bonds. So I think the two potential futures look like this. One is that we currently have very high real interest rates in the US and the UK and around the world. And that is not sustainable. With a high level of deficits and a high level of government debt, it mathematically just compounds that problem. So at some point we need to move back to financial repression and see bond yields drop below inflation and probably the short end of the curve. And that would be very positive for longer duration assets. The flip side is, and what I think is going on through the price action at the moment is who wants to own government debt at 4% when they've got these huge deficits and huge debt piles and ill conceived spending plans in many cases. And so it's one of the reasons why the stock market's holding so strong. Because if those are the two major asset classes, which they are, and you have a new incremental dollar, where are you going to put it? I think the stock market at 4 with risk, the bond market with 4 yield with risk or the stock market which right now seems to be a free money tree. So that's sort of one of the ways it's working. So we're positioned very short duration, we're moving around the currency a little bit more. We've got more dollar exposure than we have in the past, which is quite counter consensual at the moment. But that's how we're thinking about duration risk. It's not worth it at the moment but sorry to keep going but we have quite a strict inclusion criteria on our non equities. We want to make money but we don't need to make a lot of money. Our stocks do a lot of the hard work in the multi asset fund. What we're looking to do is reduce risk and adding duration. Right now given those two scenarios, it's 50, 50 whether they reduce or add to the risk. So it's not worth the trade off.
- [25:52]
B
What is your view on inflation linked bonds? Because clearly if you lengthen duration you're taking some risk and in the short term there'll be mark to market losses, no doubt. But if you hold it to maturity at the moment, you get a quite attractive real return.
- [26:08]
A
Yeah, I mean in the UK you're getting nearly 2% ahead of inflation from anything beyond nearly 10 years out to about 50 years. So a lot of wealth managers try and sell portfolios that'll outperform inflation by 2%, charge fees and it's very volatile and many don't achieve it. You can lock that in for any time period you want now. So if you're running an endowment or if you're running A family office and want that protected capital, it's available. The problem is the mark to market and that is the issue for us within our Horizon fund, our multi asset, where what we're trying to offer clients is a much, much lower drawdown portfolio. While it may be rational to own them longer term, they may suffer in the short term if real interest rates do continue to spike and we get that kind of government bond sell off scenario.
- [26:56]
B
So is there a moment in history that you could compare to when you're getting that pretty decent real return over long time periods offered by inflation linked bonds, but actually still quite low nominal numbers? It's 4.5% nominal yield, which is a 2% real yield. That's quite rare, isn't it?
- [27:18]
A
Well, the problem with analysis historically is inflation linked bonds have only really been around 25 years and so you can go through and try to recreate what they may have yielded, but it's not as trivial because it's a break even inflation rate, it's a market expected one. But I've seen quite a few people triangulating this and for the period in the 90s and early 2000s it wasn't dissimilar. So I think it was that kind of environment around then.
- [27:44]
B
So it could be pointing to a similarity to the leading up to the dot com bubble type moment.
- [27:49]
A
I'm not sure but it certainly carried on for a few years then is the point really as well. It's sustained for a lot longer than one would have imagined.
- [27:57]
B
Quick take on gold. The inflows or almost more than the price performance year to date have been really striking.
- [28:05]
A
Yeah, gold's really fascinating. I mean if you do and this could be a whole other podcast, although probably no one would listen to it, but on sort of the monetary system and how dangerously precarious it is when.
- [28:17]
B
You don't say that. Because next week we've got Neil Ferguson and we might discuss exactly that.
- [28:21]
A
Well, he's probably far better placed to discuss it than I am, but I've got a little bit of an Austrian economist sort of hat on in my head and I just think the way that the governments are mistreating their currency and supply of money really got let out of hand in Covid and it was the moment to my mind when QE moved from central banks to the government implicitly and that's a very dangerous place for us to be. And so rightly assets are reflecting that and gold as a store of value, even bitcoin, something we've never invested in but is Reflecting that lack of confidence in paper money. And I think for as long as the government continues to operate like that, gold has a very reasonable argument to stay and carry on going higher. My concern, and I don't own it at the moment, is that same rule that I mentioned earlier, which is we're only looking for investments that reduce equity risk. And I think one of the primary drivers of stock markets at the moment is this excess liquidity coming through the government channel. So if that were to dry up, I could see a scenario where gold and equities fell together and it's not much of a hedge.
- [29:24]
B
And obviously gold has been a fantastic performer year to date. So your global fund, just looking at performance before we come to conclusions, year to date, the global fund, am I right in saying, is up 14% compared to the Footsie All World, up 6.5%.
- [29:40]
A
About right.
- [29:41]
B
What do you think's driven that? I mean that's a fantastic out performance.
- [29:45]
A
Thank you. Well, what's driven it sounding slightly facetious, is the companies and they're delivering growth of around 10 to 15% a year and we've achieved a sort of 10 to 15% return over the last year or year to date. But what's held up versus the market really we have got a little bit more outside the US So I think compared to a lot of people over the last three or four years, we tend to trade one or two stocks a year. So this wasn't some big wholesale decision, but we found more value outside the US in the last three or four years and that's helped us a bit. But I think the returns have been very broad based. We've had a couple of stocks that have done poorly, but otherwise all the stocks in the portfolio are up between 15 and 35%. And that's across health care, utilities, you know, distribution companies, retailers, discretionary companies, tech companies, whatever else we have. So I think, and I like to believe it's a little bit of a broadening out of the market while the market itself is led by the very large stocks. Actually you've seen a lot of different strategies performing a bit better this year, including more value focused strategies. Our fund's not deep value, but it trades on around 14, 15 times PE, which is not that expensive for the quality businesses we own. And I'd like to think it's a bit of a reappraisal of those companies.
- [31:02]
B
It's actually quite interesting given this year's a strong year, to make the argument for non US equities that the FTSE all world is only up 6.5%. It must be weighted to some countries that haven't done so well that I don't often, often look at well.
- [31:17]
A
Also the US is so big a part of it. Something like. I think it peaked at 70% of that index.
- [31:22]
B
Yeah.
- [31:23]
A
And the dollar itself costs a lot.
- [31:25]
B
Has cost a lot. That's interesting. Yeah. So it weighs the footsie your world down. We're nearly out of time and we always like asking this question at the end. Freddie, which is what's the best stock call you've ever made and what's the worst stock call you think you've ever made?
- [31:40]
A
The best stock call has to be AutoZone, I think. I don't know what we've made on our original capital. Probably a 30 bagger already in 15, 16 years. Still a core part of the portfolio. I believe it'll treble its earnings over the next 10 years. That would make it a hundred bagger. That's going to be an exciting thing to have held worst stocks. Probably. Nokia bought into it way after the phone thing, but when it was running this duopoly of telco towers, which it does today with Ericsson, this really is sort of eight, nine years ago, but felt that that competitive advantage was impenetrable. It kind of was. But Huawei came along and the stock just misexecuted the company. Misexecuted drastically.
- [32:24]
B
There we go.
- [32:25]
A
Probably my pair. The great thing is, though, a good investment makes you 30 times your money. A bad investment lost 30% of the money.
- [32:32]
B
They didn't all make 30 times your money. But sure, if you give them time. If you give them time, they might. And then the final question is, to our listeners who are all avid investors, what is your core overriding piece of investment advice?
- [32:48]
A
I think it all boils down to knowing yourself. I truly think there are hundreds of different ways to make money. Cathie Wood and I may have very different opinions on Thematics and the market could both be highly successful. It really comes down to knowing yourself, what suits you, your temperament, what suits the way your brain thinks and really doubling down on building a repeatable process around what really gets you going and what you can really manage within your. Your own psyche. Because it's very emotional as much as it is financial and logical.
- [33:21]
B
It's. That's a really, really interesting bit of advice, I think could be applied not just to investing, to lots of sort of bits of people's careers and life choices. Freddie, it has been an absolute pleasure to catch up and to have you here on the podcast. Thank you so much for joining us.
- [33:35]
A
Thank you very much for having me.
- [33:36]
B
Freddie Lait, the founder of Latitude Investment Management. Next week on the Master Investor Podcast we'll be joined by Sunil Ferguson, the preeminent financial historian. Make sure to subscribe in order to receive that and if you've enjoyed the conversations, leave us a five star review. Please also remember that nothing you've heard on the Master Investor Podcast podcast should be considered direct financial advice. There's more on that in our show notes if you'd like to read up on it. The Master Investor Podcast is produced by Paradine Productions and Master Investor Podcast Ltd. In association with Birdlime Media. If you've enjoyed the podcast, please do subscribe on YouTube or click follow on your podcast platform and then you'll be automatically notified each time a new episode drops. I'll be back next week with Neil Ferguson. We'll see you then. And thanks again to Freddie.