Warwick Simons

Managing $1bn of public equities for institutions & HNWs. Track record +4% p.a. above global equity markets. INSEAD, Bain, Goldman alum. Tweets aren't advice.

[Warwick Simons @WarwickSimons]

***Looking for independent analysts***

I'm keen to find good independent stock analysts with a newsletter / research service who can help our process.

Ideally they would be sector specialists with a time horizon beyond the next couple of months.

Analysts I like include @dylan522p @fabknowledge @Citrini7 @heartbreakout

Please link below 👇

🙏🙏🙏

[Warwick Simons @WarwickSimons]

@arram Yeah - I also think the complexity is considered a feature not a bug by some parties.

[Warwick Simons @WarwickSimons]

It would be a wonderful use of AI to get rid of much of the extra-government bloat detailed here 👇

[Arram @arram]

Zoning adds $300 - 500k to the price of a home in cities with good jobs. High-speed rail takes 30 years to build. New drugs cost $2B. We pay 5-10x what peer countries do for the same infrastructure.

People call this "regulation." It isn't, exactly. It's stranger and worse. 🧵

[Warwick Simons @WarwickSimons]

Physical over digital.

[Paul Enright @pmje73]

In a world where the barriers to scale are declining, the hardest businesses to scale will get the highest multiples and have the greatest scarcity value.

[Warwick Simons @WarwickSimons]

follow up: my view is AI is great for meta, but it is also great for many many businesses, and tech companies will see enormous profit growth the next 5-10 y as regular companies add mroe and more tech to their operating system, probably at the expense of human capital (that will hopefully have opportunities in different roles).
i believe the debate is where in the tech stack that value accrues, and especially the share between the model companies, the infra providers, and the software providers that sit between them.

[Warwick Simons @WarwickSimons]

ok, help me understand your view: you think AI is great for Meta, but not so great for other businesses that providing compute for those businesses via public cloud isn't a good investment for the public cloud businesses, and that the people who built the best public cloud businesses don't get this?

[Warwick Simons @WarwickSimons]

I don't view the capex as offensive - in fact more is better.
If the AMZN and MSFT leadership believe there's an opportunity to earn good returns on their capital then they should go for it. I'm inclined to believe them given the similarity with Cloud and that they built the 2 best Cloud businesses - plus our modelling has them earning 15-20% ROIIC on their increased capex so far.

[Warwick Simons @WarwickSimons]

I agree on Meta; it's one of my largest positions.
On public cloud, my view is that market hasn't priced in the acceleration in GAAP EPS that will flow from their increased investment. The skeptical view prices the capex as defensive capex, whereas I believe it's a huge positve for AWS and GCP, and probably a smaller positive for MSFT (given potential threat to 1P apps business).

[Warwick Simons @WarwickSimons]

Wouldn't public cloud benefit from any (chip) supply glut through as input costs go down? Implicit in this is the hypothesis that:
1) end demand is high and rising and there isn't enough compute
2) if there is oversupply, it would show up in semicap first, then chips/memory, before compute

[Warwick Simons @WarwickSimons]

@nickkokonas Why treat capital gains differently from ordinary income? Cash inflow is cash inflow.

[Warwick Simons @WarwickSimons]

@abcampbell If this works, any idea how much the DXY falls?

[Warwick Simons @WarwickSimons]

Yeah, it's amazing. Even if you believe Ai will largely be commoditized, then maybe buy the businesses that will benefit from that? TSMC, NVDA, AVGO in chips, MSFT GOOGL AMZN as hyperscalers (capturing the value that doesn't accrue to the frontier model companies)...so much opportunity.

[Warwick Simons @WarwickSimons]

@HatfieldCapital @tangentstyle Bloomberg allows this?

[Warwick Simons @WarwickSimons]

@abcampbell And yet the USD seems to be doing well since the war started.

[Warwick Simons @WarwickSimons]

@bucketshopcap What about addiction to fast food and Coca Cola?

[Warwick Simons @WarwickSimons]

@PythiaR Yeah we just need Europe to shut up shop for the day.

So give it a few min.

[Warwick Simons @WarwickSimons]

@IanShepherdson Why would they block the strait with mines if it means they cannot export oil (so no revenue) and they piss of China that needs oil? Why create another enemy?
I expect they will be more selective than laying mines.

[Warwick Simons @WarwickSimons]

@evrgn11112231 Yep. Although sometimes my wife calls it “being rude” 🤷‍♂️

[Warwick Simons @WarwickSimons]

And one of the best questions is “why is that?”

[Evergreen @evrgn11112231]

IMO one of the biggest superpowers an investor can have that is rarely discussed is not being afraid of looking dumb and being willing to ask stupid questions.

Ego and risk aversion makes these things difficult but I’m convinced a large amount of alpha is downstream of this.

[Warwick Simons @WarwickSimons]

@evrgn11112231 I suspect the people there are useful to search for any potential innovation and also depress margins to keep regulators off their back. Similar for GOOGL.

[Varun Malhotra @varuninvesting]

A founder wrote 5,000 words explaining why Bloomberg is dying. He's building the replacement.

He built Fintool. He calls it "an Anthropic-backed company." Then he wrote the obituary for the industry he's trying to replace.

Munger: "Show me the incentive and I will show you the outcome."

The article is well written. But Fintool is a startup. Bloomberg still has 325,000 subscribers paying $28K a year.

But that's not my issue with the article.

He takes a thesis that applies to one slice of financial data and stretches it across ALL vertical software. Water utility billing across 50 regulatory jurisdictions. Court case management with chain of custody requirements. Hospital systems where a software error means the wrong patient gets the wrong drug.

These aren't search layers. These are legally mandated systems of record where 80% compliance means you're in prison.

And buried in his own framework? He admits five of his ten moats survive LLMs entirely. Regulatory lock in. Transaction embedding. Network effects. Proprietary data. System of record status.

$CSU has all five. 98% retention. $1.7B free cash flow. Customers who take 18 months to buy a stapler.

He wrote the bull case for $CSU and buried it under a headline designed to terrify you.

Software isn't dead. The guy selling the replacement just needs you to think it is.