Podcast Summary: TIP750 – Generating Alpha, Digital Payments, & AI w/ Daya Pernas

Podcast: We Study Billionaires – The Investor’s Podcast Network
Host: Clay Finck
Guest: Daya Pernas, Co-Founder, Pernas Research
Release Date: Sept 5, 2025

Overview

This episode features a deep-dive interview with Daya Pernas, an investor whose research-driven, differentiated approach has significantly outperformed the S&P 500 since 2017. The conversation spans Pernas’ core investment philosophy, portfolio management influenced by poker, the critical role of working capital, digital payments trends (with focus on Remitly and Wise), the evolving impact of stablecoins, and how AI is disrupting and enabling opportunities across sectors. The episode is practical, data-driven, and packed with both conceptual frameworks and actionable investor insights.

Main Discussion Points & Insights

1. Daya’s Investment Philosophy

Timestamp: 02:27

• Focus on "Future State" & Variant Perception:
  • Daya looks for companies where “the future state is going to be brighter than their current state.” He emphasizes the necessity of prediction:

    “We believe investing is about predictions…if you’re just trying to understand the present without conceptualizing what the business could look like, you’re missing the mark.” (02:40)

• Key Criteria:
  1. The company’s core “motor” is strengthening—a metaphor for the true generator of value, which may not be reflected in current financials.
  2. The investor’s view must be “variant” versus the market—differentiated, even if not strictly contrarian.
• On Misleading Metrics:
  • Warns against overreliance on historical financial trends:

    “The correlation between past revenue growth and future revenue growth is very, very low…Once you realize that, you need another way to predict.” (06:58)

2. Portfolio Management Lessons from Poker

Timestamp: 09:36

• Bankroll Management is Key:
  • Drawing from poker, Daya highlights that even the best decisions can be derailed by poor position sizing and risk management.

    “You can be the best poker player in the world but if you have poor bankroll management, you’re just always going to be broke.” (09:39)

• Concentration & Kelly Criterion:
  • Pernas runs a concentrated portfolio with distinct core/starting/speculative positions, sizing according to downside risk:

    “Anytime you have a situation with 100% downside, you should probably size smaller no matter what the upside is…That’s not intuitive to investors.” (11:05)

  • Critiques academic approaches like modern portfolio theory as “misleading for practical investing.”
• Role of Cash:
  • Maintains ~15% cash to be “aggressive or very defensive” as opportunities arise:

    “We never want to have to sell something we love because there’s a new opportunity.” (13:54)

3. Understanding Working Capital

Timestamp: 19:08

• Definition and Importance:
  • Daya prefers an operating definition: the minimum cash required to support a unit of revenue, stripped of non-operating accounts.

    “It’s purely the amount of money in a business that needs to be tied up to support a unit of revenue.” (19:37)

• Working Capital’s Impact:
  • Especially crucial in small-cap growth; negative working capital is a major plus.
  • Monitoring changes (e.g., customers slow to pay, suppliers demanding faster payment) is essential for risk management.
• Example:
  • References Costco’s supplier relationships and the difference in capital intensity between firms like Coca-Cola (high working capital needs) and Moody’s (low).

    “It’s more about how the working capital is changing…that can absolutely affect whether or not you invest in it.” (23:16)

4. Digital Payments & Remittances: Industry Outlook

Timestamp: 24:36

• Why Payments?
  • Massive secular tailwind: global M2 growth (money supply), with payment processors getting a cut.
  • Preference for “share gainers” in growth environments.

    “If you have a company that has a scrape on M2 growth, that’s obviously very attractive…” (25:11)

• On Stablecoins:
  • Stablecoins are mostly contained to crypto markets and have limited use in the real economy, except in a few frontier markets.
  • Traditional remittance providers like Remitly are expected to remain relevant until stablecoins gain broader economic penetration.

    “Payment methods, even if they’re not optimal, tend to stick for a long time. It takes urgency to change.” (29:39)

5. Remitly & Wise: Deep-Dive

Timestamp: 30:26

• Remitly as a Share Gainer:
  • Operating in a nearly $1T remittance market, driven by enduring immigration trends and the need for trusted, digital-native solutions.
  • Advantage over legacy players (e.g., Western Union): digital focus, trust-building marketing, user experience, and corridor complexity.
• Moat Discussion:
  • Trust, regulatory expertise, local integration, and anti-fraud capabilities create barriers. Analogy:

    “It seems like an easy business but when you peel back the curtain, you realize just how complex it is.” (35:01)

  • Example of PayPal’s limp acquisition of Xoom underscores these hidden barriers.
• Valuation:
  • Trading below 3x revenue, with forward PE ~20, yet still growing revenue 30–40%—a bargain among fast-growers.

    “If you’re right about Remitly’s future growth, you’re getting it at an extraordinarily attractive valuation today.” (44:14)

• Wise:
  • Focused more broadly on cross-border B2B transactions, requiring heavier regulatory and technical integration versus Remitly’s remittance niche.

6. AI: Disruption and Opportunity

Timestamp: 48:42

• Why Study AI Closely?
  • AI is transformational; Daya sees it as “existential” for investors and society.
  • Noted $0.5T in recent AI/datacenter investment:

    “Anytime you have that level of investment…it's important to ask who the beneficiaries might be.” (50:21)

• Meta Case Study:
  • Pernas Research bought Meta during the 2022 drawdown, capturing a 300% gain as Meta’s AI-powered ad platform improved returns.
• AI’s Key Investment-Affected Domains:
  • Robotics: AI training through simulation, soon to produce smarter, more flexible automation.
  • Energy: Powering data centers, with trends toward alternative energy/nuclear.
  • Biotech: AI will accelerate drug discovery through rapid molecular modeling.
• Portfolio Example:
  • Xometry leverages AI for digital manufacturing; well positioned for robotics/automation era.
• The Next Big AI Breakthrough?
  • Daya speculates that if AI helps humans solve a major open scientific problem (“something we scientifically couldn’t solve before”), it would be a true game changer.

    “Is AI more than just a regurgitation of data…can it create something actually new? That remains to be seen.” (57:44)

Notable Quotes & Memorable Moments

• On Predictions & Bias:

  “Investors are in the business of making predictions. But if you just extrapolate past financials, the data is clear: it will fail you.”
  — Daya Pernas (05:56)

• On Position Sizing:

  “No matter what the upside is, if the downside is severe, then you should size down.”
  — Daya Pernas (11:10)

• On Moats in Payments:

  “Payment solutions are sticky because of trust. If someone is sending $200 home to another country, that’s food on the table—they want to use what they trust.”
  — Clay Finck (34:45)

• On AI’s Impact:

  “Every company is talking about how [AI] is affecting them…it’s a general purpose technology.”
  — Daya Pernas (49:42)

• On the Future of AI:

  “If [AI] helps us solve something we scientifically couldn’t solve…that would be the next huge breakthrough, taking the human race to an unbelievable next level.”
  — Daya Pernas (57:44)

Key Timestamps for Important Segments

• Investment Framework: 02:27–05:56
• Portfolio Management & Poker Lessons: 09:36–12:38
• Cash Management: 13:47–15:20
• Working Capital Deep-Dive: 19:08–24:36
• Digital Payments Rationale: 25:03–26:46
• Stablecoins & Disruption: 26:46–30:26
• Remitly & Remittances: 30:26–44:07
• Wise's Model: 45:36–48:42
• AI’s Investment Impact: 48:42–51:32
• Meta Investment Case: 51:32–53:54
• AI Applications & Xometry Highlight: 54:07–57:32
• AI’s Wildest Potential: 57:44–58:56

Conclusion

Daya Pernas offers a rigorous, conviction-driven approach to investing, emphasizing predictive insight, variant perception, disciplined risk management, and a focus on structural winners within secular trends. From the nuanced realities of digital payments and remittance moats to the rapidly unfolding AI revolution, his perspective blends skepticism, independent thinking, and openness to dynamism—a valuable roadmap for investors navigating uncertainty and disruption.

For further actionable research, listeners can visit parnasresearch.com.