by Patrick O’Shaughnessy
I believe that any investment strategy that will deliver strong returns in the future must evolve. Any strategy should rest on rock-solid foundational principles, which change rarely if ever—things like price discipline, or business growth. But the features of the strategy must keep getting better because the marketplace is incredibly competitive.
That evolution is the topic of today’s conversation with Jason Karp. Jason is the founder and CIO of Tourbillon Capital Partners, a multi-billion dollar asset manager based in New York City.
We cover a ton of interesting ground. We start with what has happened in public and private markets, discussing the role of quants, passive indexes, and value vs. deep value investing. We compare the relative merits of investing in private equities, and where and how opportunities arise.
We then focus in on two interesting private investing trends: the health and wellness sector and the cannabis industry. First, we discuss Hu kitchen and Hu Products, the food business that Jason started with his family several years ago in response to personal health challenges. Second, we discuss his evolved views on Cannabis as an investment space and why it may also represent a massive growth opportunity.
You all know I value transparency, so it is important to note that since I recorded the conversation, my family became an investor in Hu Products. It has been a fascinating means to learn about the food, health, and wellness industry which has grown rapidly in recent years. We were customers of Hu in New York City long before I even knew Jason, which made that part of the conversation especially interesting for me.
This episode re-enforced my belief in pushing one’s investing strategy to adapt to changing market conditions and competitive pressures. If we have any hope of beating Vanguard, we can’t ever rest on our laurels.
This was an especially eclectic and fun conversation, I hope you enjoy my chat with Jason Karp.
3:06 – (First question) – Jason’s view on private markets vs public markets and how his view has evolved
6:02 – Phase of the private markets where companies can achieve huge size and scale without going public
10:31 – Framework of Jason’s value-based investing strategy
13:47 – Reverse discounted cash flow
16:27 – Are there areas of the market that are easier to predict using Jason’s models
20:29 – Tech dominance the longer they are around
21:01 – Jerry Neumann Podcast Episode
22:08 – How markets have changed over Jason’s career
25:58 – Types of edge that you can have in the market
30:00 – Broad examples of sectors that are high-quality, but momentum is hurting them
31:32 – Backstory of Hu Kitchen
38:33 – Investment research into health and wellness
42:56 – State of acquisitions, particularly in consumer product goods
47:13 – Jason’s research into Cannabis
50:43 – The misperceptions of Cannabis
56:30 – Why cannabis is a more important sector to consider than crypto
57:51 – What are the most important levers to growing a business
1:02:24 – Biggest lessons learned in hiring good people
1:06:10 – Investing lessons
1:09:27 – Kindest thing anyone has done for Jason