Episode summary
Adobe, Lululemon, PayPal – Are our Biggest Losers a Buy Now?
The Intrinsic Value Podcast
· · 1 hr 19 min · Hosts: Daniel Mahncke, Shawn O’Malley
Summary
The hosts revisit the biggest disappointments from the last year and a half of stock pitches and use them to pressure-test their process. They frame the discussion around three categories: companies they owned and sold, companies they still own but want to reassess, and companies they covered but never bought. The main theme is that portfolio decisions were shaped less by headline valuation than by changing business quality, management turnover, and opportunity cost.
Lululemon is presented as a case where the brand remained strong, but the thesis weakened because athleisure became more saturated, discounts increased, and interim management added uncertainty. The hosts argue that a premium brand can still become a poor holding if discounting begins to damage its perceived value. PayPal is the clearest example of a thesis that initially improved under a new CEO but later broke as communication deteriorated and red flags accumulated, culminating in the CEO’s firing and a takeover offer from Stripe and Advent.
Adobe is treated as a still-held position with a more divided debate. One host sees a strong business with a compressed multiple, AI-native product growth, and a durable distribution advantage; the other worries about AI disruption, leadership turnover, and lack of insider buying. Trade Desk serves as the control case: the stock was avoided because the business felt too hard to understand, and the hosts say that was a useful reminder to stay within one’s circle of competence and not rely blindly on models.
Key takeaways
- The hosts say Lululemon left the portfolio because discounting, saturation in athleisure, and interim leadership changed the risk/reward despite a still-strong brand.
- They argue PayPal’s thesis broke when new initiatives stopped getting talked about, macro explanations sounded inconsistent, and CEO Alex Chriss was fired.
- They remain split on Adobe: one host sees an 11x earnings multiple and AI-related growth as attractive, while the other sees AI and management turnover as real risks.
- They credit themselves for avoiding Trade Desk because they did not understand the ad tech business well enough, even though the stock later fell sharply.
- They say public portfolio management increases anchoring and opportunity-cost pressure, making it harder to act quickly when leading indicators deteriorate.
Notable quotes
“we had some great winners, but we also had some pretty disappointing picks. And today, we'll look exclusively at the stocks that did not perform well for us”
“I still haven't fully given up on the idea that Lulu will turn around. I think there's a good chance that looking back five years from now”
“what really gave me pause in particular was seeing all the discounts that they were offering in recent months”
“It just all looks so different from a couple of months back”
“I feel like all of that is looking somewhat odd”
How the episode opens
We've now spent about 1 and a half years publicly building a portfolio and during all our pitches, we had some great winners, but we also had some pretty disappointing picks. And today, we'll look exclusively at the stocks that did not perform well for us, and see what we can learn from them. We will discuss stocks that we used to own but sold, stocks that we still own and feel like we should give an update on, and stocks that we pitched but fortunately didn't include in our portfolio.
And we'll also know whether they are better buys today at cheaper prices. In case you don't follow the investors podcast for too long yet on this show, my co-host Kyle and I alternate on pitching you our favorite new stock ideas each week. And the end goal is to basically find great businesses that we can integrate into our intrinsic value portfolio of stocks.
Today though, as you heard in the introduction, we'll do something slightly different by looking back at stocks that we covered in the past and especially the ones that unfortunately turned against us. And I'm honestly not quite sure where we want to start here today because if we first discuss the companies that we actually own or owned in the intrinsic portfolio, we might get into a bad mood, but if we cover them last, we end on a bad note. So I would say we just start with the companies that we used to own but sold sort of our biggest mistakes and then we go to the companies that we covered but wisely decided against owning and who knows perhaps they are more attractive at today's prices and we can discuss them looking at it from today's angle.
And I want to say that on Saturday we'll do an episode on our biggest winners too.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- value investing
- portfolio review
- lululemon thesis
- paypal selling decision
- ai/creative software outlook
Companies and tickers mentioned
- ADBE
- LULU
- PYPL
- TTD
- CSGP
- Adobe
- Lululemon
- PayPal
- Trade Desk
- CoStar
Watch the episode
Watch “Adobe, Lululemon, PayPal – Are our Biggest Losers a Buy Now?” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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The Intrinsic Value Podcast, this episode and its artwork belong to The Investor's Podcast Network. Octagon is not affiliated with the show; this page is an independent summary.
