Mark Landau: Why it’s time to put down the last decade’s playbook

The old adage that “past performance is not an indicator of future returns” is possibly more relevant in today’s market than it’s ever been.

When the market is driven by momentum, as it has been through the past decade, piling onto winners has paid off. And why wouldn’t it? Earnings have been easy to fuel when debt costs next to nothing, in a market where the shareholders reward the pursuit of market share – no matter how it’s achieved.

In today’s episode of The Rules of Investing, David Thornton sits down with Mark Landau – Co-Founder and Chief Investment Officer at L1 Capital.

Mark started L1 in 2007, alongside Raphael Lamm. Their flagship long-short strategy has returned a whopping 18.7% per annum since inception, and was ranked in an HSBC survey as the ‘Best Performing Hedge Fund Globally’ in 2015 and ‘Top 20 Hedge Fund Globally’ in 2016, 2017 and 2021.

The episode covers an enormous amount of ground. We discuss everything from the uniqueness of today’s market, where L1 is deploying capital, what makes earnings sustainable, the importance of balance sheets. Mark also tells us why the investing playbook of the last decade should be put back on the shelf.

Timestamps

1:15 – Origins of L1 Capital
3:20 – Lessons from the GFC
5:30 – The problem with long-only investing
6:00 – Quality value strategy
8:10 – Today’s unprecedented market cycle
10:00 – No quick fix for inflation
19:55 – How macro informs a bottom-up approach
22:30 – Where L1 is deploying capital
24:30 – Expensive defensives
28:00 – Sustainable P/E ratios
30:30 – Importance of under-geared balance sheets
31:10 – Pricing power
32:00 – Management teams on notice
35:30 – What makes a good short
42:50 – 3 favourite questions

Rules of Investing

Oct 14, 2022 • 55m

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