Ep 456. Yen Carry Trade, Buffett's AAPL Sales, and MCS vs. CNK Price Divergence

·58 min·5 clips

Cinemark surged 80% while Marcus fell 10%—why did two nearly identical theater stocks suddenly diverge so wildly?

Andrew Kuhn and Geoff Gannon open by addressing the yen carry trade unwinding, which caused a sharp decline in Japanese and global markets, linking it to shifting interest rate expectations. They transition to broader macro concerns, including recession fears and Fed policy, noting how markets quickly react to economic data. The discussion shifts to value investing opportunities, with Geoff mentioning chapter 11 filings as a potential area for finding undervalued stocks, though he cautions against relying solely on aggregated data. The hosts then delve into Warren Buffett's recent sales of Apple and Bank of America, with Geoff proposing a unique theory: Buffett is reducing positions to avoid burdening his successors with holdings he wouldn't buy anew, rather than timing the market. They examine Berkshire's massive cash pile and the challenges of deploying such capital. A major segment focuses on the surprising price divergence between Cinemark and Marcus, two comparable movie theater companies, with Cinemark surging 80% while Marcus fell 10% over six months. Geoff attributes this to momentum investing and stock-specific factors rather than fundamental business differences. A listener's email prompts a discussion on valuing Marcus's hotel assets and why cyclical assets like hotels trade at higher multiples. The hosts analyze real-time Twitter responses to the divergence, citing reasons like IMAX exposure, Latin American markets, and hotel recession sensitivity. They also touch on box office trends, with Deadpool & Wolverine's strong performance, and future film slates. The episode concludes with reflections on market reflexivity and the influence of passive investing and algorithmic trading on stock prices.

As heard by us

A measured warning about expensive markets and the danger of assuming a cheaper comparable has to catch up.

Focused Compounding sits with a market that still looks priced near its expensive edge. Andrew Kuhn and Jeff Gannon treat that setup as fragile, especially if expectations are already built around a very good outcome.

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Why you'd press play

Want a reality check before assuming Marcus should catch up with Cinemark?

Read the full recommendation in PlayNext →

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