TIP708: Why Wall Street’s Playbook Is Broken w/ Harris Kupperman

We Study Billionaires - The Investor’s Podcast Network

Stig Brodersen

Education, Investing, Business

4.6 • 3.6K Ratings

🗓️ 23 March 2025

⏱️ 75 minutes

🔗️ Recording | iTunes | RSS

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Summary

On today’s episode, Kyle Grieve chats with Harris Kupperman about his investing strategy based around concentrated bets on macro and events. Harris has decades of market experience and shares his thoughts on why investors have so much difficulty navigating the markets. Harris Kupperman is Praetorian Capital Management LLC's founder and chief investment officer. He focuses on inflecting trends and event-driven strategies. He’s also the author of Kuppy’s Korner, a widely followed investment blog. In addition to his investing work, he serves as Chairman and CEO of Mongolia Growth Group, giving him firsthand experience as an operator. IN THIS EPISODE YOU’LL LEARN: 00:00 - Intro 02:57 - Unlocking macro investing secrets that actually work in real markets 15:58 - How Harris shifts between strategies based on market conditions 19:58 - Why cutting low-conviction positions can unlock capital for bigger winners 25:35 - The hidden advantage of focusing on absolute returns over benchmarks 28:18 How averaging up in commodity cycles can multiply your returns 31:13 - Why Harris believes many MAG-20 stocks aren’t worth the hype 42:38 - Why asset-heavy businesses still hold massive value in today’s economy 53:13 - Why stubbornness and patience are key to real investing success 56:54 - Hedging: A smart risk strategy or just a waste of returns? 1:01:32 - The case for moving fast when investing in inflection point businesses Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences. BOOKS AND RESOURCES Join Clay and a select group of passionate value investors for a retreat in Big Sky, Montana. Learn more here. Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, Kyle, and the other community members. Read Harris' articles here. Follow Kyle on Twitter and LinkedIn. Check out all the books mentioned and discussed in our podcast episodes here. Enjoy ad-free episodes when you subscribe to our Premium Feed. NEW TO THE SHOW? Get smarter about valuing businesses in just a few minutes each week through our newsletter, The Intrinsic Value Newsletter. Check out our We Study Billionaires Starter Packs. Follow our official social media accounts: X (Twitter) | LinkedIn | Instagram | Facebook | TikTok. Browse through all our episodes (complete with transcripts) here. Try our tool for picking stock winners and managing our portfolios: TIP Finance Tool. Enjoy exclusive perks from our favorite Apps and Services. Learn how to better start, manage, and grow your business with the best business podcasts. SPONSORS Support our free podcast by supporting our sponsors: Hardblock Found SimpleMining CFI Education The Bitcoin Way Unchained Netsuite Fintool Shopify Onramp Vanta TurboTax Fundrise HELP US OUT! Help us reach new listeners by leaving us a rating and review on Spotify! It takes less than 30 seconds, and really helps our show grow, which allows us to bring on even better guests for you all! Thank you – we really appreciate it! Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm

Transcript

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0:00.0	You're listening to TIP.
0:02.8	Today's guest is Harris Kupperman, the founder of Pretorian Capital, a fund that has absolutely crushed the S&P 500, delivering net returns of 711% since 2019, compared to the S&P 500's total return of 155%.
0:16.8	Now, Harris has a unique investing style, blending businesses that benefit from secular inflections
0:22.1	or cyclical tailwinds with event-driven special situations.
0:26.7	Like any value investor, he loves a good deal, and lately, he's been finding plenty in hard
0:31.2	assets.
0:32.2	While many investors have shifted towards capital-light businesses, Harris has taken an
0:36.7	opposite approach. About half of
0:38.3	his capital is invested in hard, asset-rich companies. His reasoning is pretty compelling.
0:43.9	Inflation drives up the replacement costs of these assets that benefit existing owners.
0:48.5	There's a limited supply in industries that he's invested in, such as shipping, energy, and real
0:52.8	estate, and this limited
0:54.2	supply strengthens pricing power. Many of these assets generate massive amounts of cash flows.
1:00.5	And then on top of that, Wall Street tends to undervalue hard assets, which creates great
1:05.0	buying opportunities. And then since these assets are undervalued, and you mix that with
1:09.2	the strong cash flows, this allows companies
1:11.3	to buyback shares below intrinsic value. And then on top of that, the reason this kind of opportunity
1:15.8	exists today is that institutions have offloaded some of these assets for non-investing reasons,
1:19.8	which have created these opportunities with significant upside and lower risk. Another thing that makes
1:25.1	Harris stand out to me is how he runs his fund. Instead of structuring it like a traditional investment vehicle, he truly treats it like his own personal account with others just along for the ride. While many fund managers invest a large portion of their net worth in their funds, they often face restrictions on what they can and can't buy due to institutional constraints.
1:44.4	Harris has structured his fund to remove much of that, allowing him to invest exactly as he would
1:48.5	if he were only managing his own money.
	...

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