It's Not All About Amazon (w/ Richard Excell) | Interview | Real Vision™

TL;DR

Rich Excel of Wolverine Asset Management discusses the combination of quantitative insights and discretionary management in the macro investing industry.

Transcript

hi i'm michael green portfolio manager with teal macro I'm really excited to be here today to interview rich Excel of Wolverine asset management rich and I've gotten to know each other over the years in particular by arguing is we'll talk about in our session rich brings a really interesting and confluence of quantitative insights and discretionary... Read More

Key Insights

• 🔬 The macro investing industry is shifting towards integrating quantitative insights and discretionary management.
• 🏪 The US retail industry is likely to see store closures and disruption, but not all brands will go to zero.
• 🥹 Retail brands still hold value even with potential closures, making them attractive to private equity and other buyers.
• 👲 Amazon's market cap is large, but the cash flows of the next ten retailers are dominant, although direction may change due to necessary investments.
• 🚗 Certain retail brands, such as Nordstrom's, Ebay, and Macy's, are gaining traction in online and mobile shopping.
• 🏆 A combination of quantitative and qualitative analysis is needed to identify potential winners in the retail industry amidst disruption.
• 🧑‍🏭 Macro investors should consider factors beyond short-term earnings and sector flows when evaluating retail brands.

Questions & Answers

Q: How is the macro investing industry moving towards combining quantitative insights with discretionary management?

The industry is shifting away from relying solely on machines or humans operating with impunity and instead focusing on integrating both quantitative insights and discretionary decision-making in macro investing. This confluence allows for a more comprehensive and nuanced approach.

Q: How can retail brands navigate the anticipated store closures and potential disruption in the industry?

While there will be losers and store closures, there is still value in certain retail brands. Even poorly run stores can have successful areas. Private equity buyers and other investors may find these brands attractive, considering factors beyond just next quarter earnings or sector flows.

Q: Is Amazon dominating the retail industry both in terms of market cap and cash flows?

While Amazon's market cap surpasses the combined market caps of the next ten retailers, the cash flows generated by those retailers still dominate what Amazon generates. However, the direction of these cash flows may change as retailers need to make necessary investments.

Q: Are there any potential catalysts for certain retail brands to come out on the other side of disruption?

Yes, there are potential catalysts for certain retail brands to succeed amidst disruption. Some brands, like Nordstrom's, Ebay, and Macy's, are starting to creep up the rankings in online and mobile shopping, especially with Millennials. These brands may have the potential to thrive in a changing retail landscape.

Summary & Key Takeaways

• The US has a significantly higher number of retail stores per capita compared to other developed countries, indicating potential store closures and loser brands.

• Despite the anticipated closures, there is still value in certain retail brands that have successful areas and can potentially attract private equity buyers.

• Amazon's market cap is larger than the combined market caps of the next ten retailers, but their cash flows are dominated by those retailers, making them potentially interesting investments.