Podcast Summary: We Study Billionaires – TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley

Date: December 5, 2025
Host: Clay Fink (The Investor’s Podcast Network)
Guest: Shawn O’Malley (Host, Intrinsic Value Podcast)

Overview

In this in-depth episode, host Clay Fink sits down with Shawn O’Malley of the Intrinsic Value Podcast to discuss how O’Malley and co-host Daniel Manka research stocks, construct and manage the Intrinsic Value Portfolio, and develop high-conviction investment theses—particularly in an era dominated by market narratives around AI and big tech. The conversation explores detailed case studies on Adobe, Nike, Lululemon, and others, focusing on lessons learned, evolving investor mindsets, and the value of disciplined, long-term thinking.

Main Themes and Purpose

• Applying the Classic Value Investing Playbook to modern markets and companies outside the typical value universe.
• Transition from Student to Practitioner: The importance of actually “getting your hands dirty” instead of just reading and learning.
• Concentrated, High-Conviction Investing: Why chasing many “small wins” is less effective than letting a select few compound.
• Navigating Narratives: How to manage psychological biases and market fears—being “greedy when others are fearful.”
• Scalable Research Processes: Using technology and structured frameworks to research one company per week.
• Deep Dives into Current Portfolio Holdings: A candid look at why names like Adobe, Nike, Lululemon, and Uber make the cut.

Key Discussion Points & Insights

1. Evolution as an Investor (03:33)

• Moving from Learning To Doing:
  • Shawn shares how his approach shifted from nearly all reading to hands-on research and real portfolio management.
  • “For years I spent most of my time just reading books and shareholder letters… but at some point, without any practical experience, the marginal returns on that information just diminished.” —Shawn O’Malley [03:38]
• Conquering Imposter Syndrome:
  • Emphasizes that even without “perfect” experience, acting on your ideas is crucial.
• Swinging for the Fences:
  • Lesson from 100-bagger philosophy; it’s better to make one truly exceptional investment every few years than to chase frequent, smaller wins.
  • “Even if you seldom swing, you’ve got to be constantly looking for those opportunities, because you don’t want that once-in-a-decade investment to just pass you by.” —Shawn O’Malley [07:57]

2. Mindset Around Compounders and Patience (08:40)

• Investors overestimate their ability to find ‘the next hundred bagger’—even stocks like Alphabet took 20+ years to reach that status.

3. Portfolio Review and Cash Management (11:49)

• Long-Term Horizon:
  • The Intrinsic Value Portfolio allocates capital slowly, with an initial 100% cash position in 2025 now down to one-third cash.
• Performance:
  • Despite holding significant cash, the portfolio is up over 10% YTD, a testament to discipline and opportunism.
  • “Our entire portfolio, including cash, is up over 10% year to date. For the total portfolio to do a double digit return, it’s performed pretty well.” —Shawn O’Malley [13:10]
• Case Studies:
  • Winners include Reddit (tripled at one point), Uber (+50%), Nubank (+40%), Ulta (+40%), Alphabet (+60%).

4. Finding Value in Large-Cap Tech (18:26)

• Market Inefficiency Even in Giants:
  • “Perhaps the most well-known company in the world [Alphabet] clearly looked undervalued… In the past year, the stock fluctuated from $146 to $290—a double. And nothing about that sounds like an efficient market to me.” —Shawn O’Malley [16:55]
• Strategy:
  • Don’t overlook large, “boring” tech. Patience and opportunism pay off even in mega-cap names.

5. The Next Tier of Tech Businesses (20:46)

• Comfort in Understanding:
  • Avoids companies too far beyond comprehension (e.g., Nvidia, Tesla) and prefers those with tangible consumer connections (Uber, Reddit, Spotify).
• Brand, Network Effects, & Stickiness:
  • “They’re really consumer companies as much as they are tech companies… what we really love about these kind of second tier tech businesses is that they’re really consumer companies as much as they are tech companies.” —Shawn O’Malley [21:36]

6. The Case for Retail—Nike, Lululemon, Ulta (35:11)

• Consumer Insights as Edge:
  • Experience as an actual customer informs conviction.
• Brand Durability:
  • High customer loyalty, limited discounting, global brand reach set companies like Lululemon and Nike apart.
  • “For as premium retail goes, this is a brand with industry-leading rates of customer loyalty… If I do prove to be wrong about Lulu, it would really be an illustration of how using consumer insights can let you down.” —Shawn O’Malley [35:47]
• Risk Management:
  • These positions remain smaller relative to “quality compounders” like Alphabet; diversity buffers individual mistakes.

7. Turnaround Bets and Sizing (43:32)

• Nike’s Appeal:
  • Despite a lost decade, Nike’s global brand and margin superiority offer optionality for a successful turnaround.
  • “If anyone has the brand credibility and resources to have a modestly successful turnaround, it would be Nike.” —Shawn O’Malley [43:39]
• Position Sizing & Process:
  • “Nike is only a 2% holding in our portfolio. We actually normally aim for 5% size, so it’s not our highest conviction bet by any means.” [48:34]

8. Portfolio Ranking and Trimming Winners (49:19)

• Discipline in Rebalancing:
  • “You’ve got to be mindful of not trimming the flowers to water the weeds… for us, with Reddit, the implied growth at $250 a share… just felt unbelievably unrealistic.” —Shawn O’Malley [50:14]
• Top Current Picks:
  • Still bullish on Uber and PayPal, recently trimmed Ulta and Reddit after significant run-ups.

9. Ferrari as a Case Study in Compounding Brands (52:04)

• Cult Brands and Pricing Power:
  • Despite not yet buying, O’Malley admires Ferrari’s blend of brand strength, cult following, and high margins.
  • “They are the epitome of pricing power… shares have compounded at something like 24% a year since 2016.” —Shawn O’Malley [52:29]

10. Adobe: A Contrarian AI “Loser” or Bargain? (55:24)

• Earnings Vs. Valuation Disconnect:
  • Adobe’s EPS has compounded at 18% annually since 2019, but its PE ratio has collapsed from 50 to near 20.
  • “What I see is a company that has been arbitrarily labeled an AI loser potentially. Yet the business has kept pushing along unbothered… net income and revenues are up by nearly 50% since 2021.” —Shawn O’Malley [55:54]
• Switching & Integration Moats:
  • 95% of revenues are recurring; core customer is the enterprise, not the hobbyist.
  • “Adobe’s customers are these major marketing agencies for brands like Coca Cola and Hollywood movie studios. So those kind of customers cannot be using generative AI for movies or commercial production, because it opens them up to major copyright violations.” [56:38]
• AI Response & Firefly:
  • Adobe’s proprietary AI is trained on licensed data—AI competitors can’t offer the same legal safety.
• When to Sell / Bear Cases:
  • O’Malley would reconsider his thesis if he saw “mass defections” among professionals or deteriorating financials.

11. Research Process & Using Technology (83:37)

• Structured Deep Dives:
  • Starts with SEC filings, investor presentations, and earnings calls—summarized and parsed via cutting-edge tools like NotebookLM and ChatGPT.
  • Gathers diverse perspectives: podcasts, Substacks, Twitter threads, ValueInvestorsClub, and CEO interviews.
• Writing as Thinking:
  • Shawn credits writing 10-20 pages per company as critical for clarity: “The act of trying to explain things in written form dramatically advances my understanding...” [85:33]
• Critical Thinking Over Raw Data:
  • Ultimately, it’s not access to the most data, but ability to synthesize and reflect that creates an edge for the individual investor.

Notable Quotes & Memorable Moments

• On Changing Mindset:

  • “I guess you could say I’ve changed my mind a bit on just how risky individual stock investing can be if it’s approached carefully and intelligently.” —Shawn O’Malley [04:54]

• On Market Narratives:

  • “Even the best companies in the world still hit 52-week lows…having some cash on hand gives us the chance to capitalize on really what are these inevitable opportunities.” —Shawn O’Malley [15:56]

• On Focusing on What You Understand:

  • “We’d rather earn satisfactory returns on companies that we understand and can buy with a margin of safety than roll the dice on a business that we don’t understand.” —Shawn O’Malley [20:57]

• On Brand Power:

  • “Lululemon has been an industry leader for 15 years now, and Nike is going on four decades of dominance.” —Shawn O’Malley [36:25]
  • “The power of a strong brand can go a long, long way.” [36:43]

• On Trimming Winners:

  • “At some point, you also have to have a sanity check on how much you’re willing to let an investment run before you lock in some of your profits.” —Shawn O’Malley [50:08]

• On Writing as a Research Tool:

  • “The act of trying to explain things in written form dramatically advances my understanding…” —Shawn O’Malley [85:33]

• On Intrinsic Value Estimates:

  • “A fair value for Adobe is north of $500 per share right now. Even with a 20% discount… that’s a $400 implied price per share, and the stock is still undervalued today by nearly another 20%.” —Shawn O’Malley [78:21]

Key Timestamps for Major Segments

• 03:33 — Shawn’s biggest mindset shifts in the last year
• 11:49 — Intrinsic Value Portfolio performance and cash allocation
• 18:26 — How even mega-cap tech can be mispriced
• 20:46 — Why focus on “second-layer” tech companies instead of Nvidia/Tesla
• 35:11 — Investing in retail: Lululemon and Nike rationale
• 43:32 — Is Nike a turnaround? Sizing and conviction
• 49:19 — How the team decides when to trim or cut portfolio positions
• 52:04 — Ferrari: brand, compounding, and ‘cult’ economics
• 55:24 — Case study: Adobe and the nuances of being contrarian on an “AI Loser”
• 83:37 — O’Malley’s structured research process and writing as a tool for clarity

Conclusion

Shawn O’Malley’s approach blends the best of value investing’s psychological discipline with an honest embrace of evolving business realities—especially in tech and consumer sectors. He and Daniel Manka demonstrate a rigorous yet approachable research process, focusing on long-term compounders with misunderstood narratives, and emphasize the importance of actually acting on one’s convictions. The episode is a masterclass in combining process, temperament, and actionable frameworks—perfect for individual investors looking to build lasting wealth “being greedy while others are fearful.”

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For more, check out the [Intrinsic Value Podcast], subscribe to their newsletter, or visit [theinvestorspodcast.com]. Full models and episode links are available in the episode’s show notes.