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We Study Billionaires - The Investor’s Podcast Network

TIP767: Mastermind Discussion Q4 2025: Sanofi, Remitly & Crocs w/ Stig Brodersen, Tobias Carlisle, and Hari Ramachandra

with Tobias Carlisle, Hari Ramachandra

Published November 9, 2025
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About This Episode

The episode is a quarterly mastermind discussion where Stig Brodersen, Tobias Carlisle, and Hari Ramachandra each pitch an investment idea and stress-test each other's theses. Hari presents Sanofi as a relatively cheap, dividend-paying global biopharma with durable vaccine and immunology franchises that he views as a "T-bill with growth" type holding. Stig analyzes Remitly, a fast-growing digital remittance platform, weighing its strong unit economics and underbanked niche against strategic drift, intense competition, and heavy stock-based compensation, while Toby pitches Crocs as a deeply undervalued, cash-generative footwear brand facing fashion, tariff, and acquisition risks but offering significant upside if issues are managed.

Topics Covered

Investing Capital allocation Stock market valuation Financial technology Tariffs Risk and uncertainty Customer acquisition Unit economics Crypto Footwear industry

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Quick Takeaways

  • Sanofi is pitched as a conservative, income-oriented investment with a diversified drug portfolio, strong vaccine franchise, and roughly 5% dividend yield trading at a discount to peers and the broader market.
  • Healthcare and biopharma stocks appear historically cheap relative to the S&P 500, which the hosts attribute to sector rotation toward AI/"Magnificent Seven" names and regulatory or tariff concerns.
  • Remitly has attractive reported unit economics and rapid growth in the global remittance market, but faces intense competition from Wise, PayPal, Western Union, and potential disruption from stablecoins.
  • Stig is concerned that Remitly's move from a focused migrant-remittance niche into broader neobanking and B2B payments may dilute its edge and increase competition with better-capitalized players.
  • Heavy stock-based compensation and dilution at Remitly, even as it authorizes buybacks, raise questions about capital allocation discipline and whether employees truly "think like owners."
  • Crocs is generating close to $1 billion in free cash flow on a roughly $4.3 billion market cap, trades at about 6x earnings, and has authorized buybacks equal to roughly a quarter of its share count.
  • Key risks for Crocs include fashion cyclicality, tariff exposure due to Asian manufacturing, and the underperforming Hey Dude acquisition, which has already suffered a large impairment.
  • The mastermind participants distinguish between "wealth preservation" ideas like Sanofi and higher-volatility, potentially higher-return ideas like Crocs, highlighting the importance of sizing and role in a portfolio.
  • The discussion underscores how important it is for investors to understand customer behavior, local ecosystems, and regulatory realities when evaluating fintech and cross-border payment businesses.

Podcast Notes

Mastermind format and episode setup

Overview of the three stock pitches

Description of the companies to be discussed: Sanofi, Remitly, and Crocs[0:09]
• Hari will pitch Sanofi, a global pharmaceutical leader with a strong vaccines and immunology pipeline.
• Stig will cover Remitly, a fast-growing digital remittance company focused on cross-border money transfers.
• Toby will present Crocs, a footwear brand that has transformed from a fashion punchline into a global powerhouse but still appears cheap.
Purpose of the mastermind discussions[0:33]
• The format is about testing ideas, asking hard questions, and exploring where each investor might be wrong.
• Stig notes that this process has made him a better investor, keeps him grounded and curious, and he hopes it does the same for listeners.

Show intro and host/guest introductions

Podcast framing and download milestone[0:59]
• Since 2014, the show has studied financial markets and books that influence self-made billionaires.
• The show emphasizes keeping listeners informed and prepared for the unexpected.
Host and panelists[1:29]
• Stig Brodersen introduces himself as host of The Investor's Podcast.
• He notes he is joined by Hari and Toby for this mastermind discussion.

Hari's investment pitch: Sanofi (SNY)

Sanofi business overview

Company description and focus areas[2:11]
• Hari has been looking for undervalued stocks and presents another pharmaceutical pick: Sanofi.
• Sanofi is a global biopharma company focused on immunology and vaccines, based in France with global presence.
Two-engine business model concept[2:25]
• Hari conceptualizes Sanofi as having two main engines: blockbuster drugs and vaccines.
• First engine: Dupixent, an anti-inflammatory blockbuster drug approved across multiple indications, including COPD, with about a decade of patent runway remaining.
• Second engine: vaccines, including seasonal flu, infant RSV protection, and other high-quality vaccines.
Vaccines compared to SaaS business model[3:13]
• Hari draws on his experience in SaaS and likens vaccines to software-as-a-service because they provide recurring revenue.
• He notes that vaccines function like a subscription model since people take them every flu season, creating repeat business and stable income.
R&D and future pipeline areas[3:32]
• Sanofi is investing significantly in genetics, cell biology, and immunology.
• Hari treats these R&D areas as potential upside if they lead to new blockbuster drugs.

Valuation and peer comparison for Sanofi

Is Sanofi a value stock?[4:09]
• Hari frames the key question as whether Sanofi is a value stock rather than just a good business.
• He notes Sanofi trades in the low teens on a PE basis, around 16, which is not "really, really cheap" but is attractive relative to peers and the market.
Comparison to pharma peers and broader market[4:29]
• Hari compares Sanofi's PE of about 16 to Johnson & Johnson at roughly 25, Pfizer at 18, with Merck being closest in valuation.
• He contrasts these with tech-heavy "MAG-7" or "MAG-10" names trading at 30-40x PE.
• Sanofi trades below the historical S&P 500 average PE and below many pharma peers.
Dividend yield and buybacks[5:10]
• Sanofi yields about 4.9% in dividends and conducts healthy share buybacks.
• Despite this, the question remains for Hari why the stock trades at a discount.

Explaining Sanofi's earnings decline and recovery

Patent expiry impact[5:43]
• Hari believes one driver of the discount is a significant EPS decline in 2020-2023.
• A blockbuster drug, Aubagio (pronunciation uncertain), went off patent, generics entered, and revenue declined steeply.
R&D ramp-up and revenue impact[5:46]
• At the same time, Sanofi significantly increased R&D investments to compensate for the lost patent.
• Hari acknowledges critics could argue they should have ramped R&D earlier, but the combined patent loss and R&D surge caused notable revenue and EPS declines in 2023.
• He notes some recovery in 2024 and expects continued growth.

Sanofi's moat, currency diversification, and capital allocation

Moat components[7:16]
• Hari sees a twofold moat: biologic exclusivity on blockbuster drugs and large-scale vaccine manufacturing with regulatory know-how.
• He emphasizes Sanofi's strong government relationships and platform of regulatory capacity across many countries, beyond just individual drugs.
Currency diversification benefits[7:43]
• Sanofi is based in Europe, reports in euros, and has worldwide sales with about 48% from the Americas.
• Hari notes this can provide dollar diversification if the dollar declines, which he says "most people are talking about now."
Capital returns and restructuring[8:10]
• Hari believes Sanofi has been a good steward of capital and owner-oriented, consistently returning capital.
• In 2025, they plan to complete a €5 billion buyback and have a track record of consistent dividends.
• Sanofi has recently restructured to focus on core business and streamline its consumer health segment, akin to a prior move by Johnson & Johnson that Hari recalls as beneficial.

Hari's investment thesis framing for Sanofi

Overall thesis and expected returns[9:11]
• Hari views valuation as reasonable relative to quality and diversification of blockbuster drugs and vaccines.
• He frames Sanofi as a "safe place to park" capital with 7-10% expected annual returns combining roughly 5% dividend and 3-4% growth.
• He emphasizes a long runway: little risk of obsolescence from AI and ability to hold for a decade despite market turmoil.
AI as potential tailwind and M&A dynamics[17:21]
• Hari suggests AI could be a tailwind in drug discovery by reducing cost and accelerating development via tools like protein simulation (he references "Alpha 4" from Google).
• He notes small biotech startups may create breakthroughs, but large pharma like Sanofi often acquire them and are better equipped to handle regulators globally.

Discussion on healthcare sector valuation and Sanofi

Toby's observations on cheap healthcare and sector rotation

Healthcare relative valuation context[10:25]
• Toby notes that healthcare, biopharma, and pharmaceuticals are trading as cheaply relative to the overall market as they have since around 2000.
• He compares the current environment to the 2000 tech bubble, where tech was expensive and other sectors like healthcare and energy were relatively cheap.
Speculation on why healthcare is out of favor[10:25]
• Toby does not know exactly why healthcare is getting "whacked" but speculates about a COVID hangover or capital being pulled into AI-related stocks.
• He notes healthcare businesses have high margins and subscription-like revenue, making their cheapness puzzling.

Hari's guesses on risks affecting pharma valuations

Tariffs, regulations, and supply chain shifts[11:06]
• Hari guesses tariffs and new regulations could raise costs for U.S.-based pharma that import active pharmaceutical ingredients (APIs) and are forced to reshore production.
• He notes Sanofi, as a non-U.S. company, may be less directly harmed but could still be caught in generalized sector sentiment.
Capital flows into AI and mega-cap tech[11:57]
• Hari's second guess is that AI and "MAG-7" type stocks are sucking up investor attention and capital, leaving less interest in healthcare.
• He notes there is not enough "meme ability" in healthcare; these are consistent businesses without AI-type upside narratives.

Stig's perspective on product reliance and T-bill analogy

Product concentration risk comparison: Sanofi vs Merck[13:21]
• Stig recalls Hari's previous mastermind pick Merck and Keytruda, which contributed a very large share (he recalls around 78%) of Merck's revenue.
• He contrasts that with Sanofi, where Dupixent is roughly a third of revenue, making Sanofi less reliant on a single product.
Sizing positions based on reliance and risk[13:49]
• Stig says that with a company like Merck he might limit position size (e.g., 1%) due to product cliff risk, whereas Sanofi's diversification is more comfortable.
Comparing pharmaceuticals to T-bills[14:38]
• Stig likens large pharmaceuticals to T-bills in terms of relatively low risk and steady returns, but with somewhat higher downside risk and more upside.
• He notes that, in a world of widespread 2% yields, big pharmas at roughly 16x PE can look relatively attractive even if growth is modest.

Stig's investment pitch: Remitly (RELY)

Remitly business overview and economics

Company description and core product[23:20]
• Remitly is a U.S.-based fintech that operates a digital remittance and cross-border money transfer platform.
• It was founded in 2011 and went public around 10 years later.
• As of 2025, it serves 8.5 million active customers and operates in more than 5,000 remittance corridors (e.g., U.S. to Mexico).
Revenue streams and transaction dynamics[23:53]
• Remitly generates revenue mainly from transaction fees and foreign exchange spreads; it is starting to add memberships and other monetization methods.
• Transaction fees vary by corridor, payment method, and delivery speed.
• 93% of payments are sent and received within an hour, enabled by Remitly pre-funding accounts in different countries so transfers are recorded internally before money physically crosses borders.
• The current take rate is about 2.24%.
Growth, scale, and unit economics[24:50]
• The company is growing revenue more than 30% per year and has significant operational leverage.
• Stig estimates normalized EBIT as potentially around 10% at scale.
• He highlights very attractive reported unit economics: less than 12-month payback on customer acquisition and a lifetime value to customer acquisition cost ratio around six.

Ownership structure and competitive positioning

Founder and key shareholders[25:19]
• Founder-CEO Matt Oppenheimer owns a bit more than 2% of outstanding shares.
• The largest investor is Prosus, which invested heavily in private rounds; Vanguard and BlackRock are also large holders.
Comparison with Wise and internal choice at TIP[25:54]
• Stig notes that TIP uses Wise, not Remitly, for paying team members in multiple countries.
• He describes their selection process: they needed reliable, low-fee cross-border payments, asked their CEO for advice, and she suggested Wise.
• He admits this process wasn't very sophisticated and points out the inertia: once a system is working, there is some stickiness even if switching is easier than for cloud providers.
Niche positioning: migrant workers vs SMEs[27:11]
• Historically, Remitly has been better positioned to serve migrant workers sending remittances, especially to unbanked recipients.
• Wise has been more focused on small companies like TIP, making it more of a B2B solution, whereas Remitly's edge is in serving the underbanked.

Engineering mindset vs finance mindset and stablecoin discussion

How engineers and finance people view products[26:57]
• Stig likes to talk to engineers when evaluating a product because they focus on properties and believe the best product should win.
• He contrasts this with finance, where complex, high-fee products and regulatory moats can allow inferior offerings to succeed.
Stablecoins as a competing remittance technology[27:11]
• Stig raises the question of whether stablecoins are a better remittance solution than traditional fiat-based flows.
• He notes the theoretical advantages: fast settlement and low fees, with stablecoins potentially tied to the U.S. dollar rather than depreciating local currencies.
• However, he argues Remitly occupies a useful middle ground: cheaper and more efficient than Western Union-style incumbents, yet integrated into the regulated banking system in ways stablecoins are not.
• He points out that local legislators and banks have incentives to prefer regulated, deposit-based systems and are suspicious of stablecoins.
Recipient needs and regulatory constraints[28:37]
• Stig emphasizes that for many recipients, remittances are their main income; they prioritize speed and the ability to buy groceries over concerns about monetary debasement.
• Local governments often mandate the use of fiat currency, so recipients still need to convert stablecoins into local money, which requires intermediaries like Remitly or Wise.

Remitly: local ecosystem examples, TAM expansion, and risks

Philippines corridor and local payment infrastructure

Historical focus on U.S.-Philippines and current importance[31:52]
• Stig notes that the Philippines is Remitly's third-largest market after Mexico and India, and in its early days the U.S.-Philippines corridor was its only route.
• He has 11 team members in the Philippines and did scuttlebutt research there.
Unbanked recipients and mobile wallets[32:38]
• Many Filipino recipients may be unbanked or primarily use mobile wallets like GCash and Maya, which are deeply entrenched via telecom providers.
• These apps function as de facto banking tools for paying for goods and services, particularly where traditional bank penetration is low.

TAM claims and Stig's skepticism

Remitly's stated TAM expansion[32:54]
• Remitly currently has about 3% share of a roughly $2 trillion remittances market.
• Management has announced plans to expand their TAM by 10x by targeting 1.5 billion gig-economy freelancers and millions of small businesses.
• An example: a U.S.-based company that outsources work to the Philippines could use Remitly for both personal remittances and business payments.
Why a larger TAM made Stig less excited[34:18]
• Stig initially liked the focused story: 3% of a growing remittance market where Remitly has cost advantages over Western Union-style incumbents and deep local understanding.
• The shift toward competing directly with Wise and others in broader B2B and neobanking spaces worries him because it pits Remitly against stronger, more diversified competitors.

Cultural and geographic complexity as both edge and challenge

Need for granular local understanding[34:48]
• Stig uses the Philippines' complexity (7,000+ islands, 150+ languages) to illustrate how needs differ region to region.
• He notes differences: some customers prefer mobile wallet credits, some want cash pickup at specific locations, others need door-to-door cash delivery.
• He argues Remitly's ability to tailor offerings to such local nuances distinguishes it from generic neobanking products.
Concern about becoming "just another neobank"[36:03]
• Stig worries that if Remitly tries to become a broad neobank rather than a focused remittances specialist, it may dilute its competitive edge.
• He questions whether they can beat Wise and other established players on their own turf.

Q&A and critique of Remitly: moat, competition, and valuation

Hari's user-based perspective and questions

Low switching costs and corridor-specific competition[38:32]
• Hari has used remittance services for decades to send money to India and has seen the space evolve from week-long transfers to near-instant transfers.
• He observes that each corridor (e.g., U.S.-India, U.S.-Mexico) tends to have its own popular service, similar to ride-sharing markets having Uber, Lyft, or Ola in different regions.
• Switching costs are very low; as a user he can choose among providers like Xoom (now PayPal), Wise, Square, and others based on rates.
Hari's questions on moat and growth vs valuation[38:52]
• Hari asks what Remitly's moat is, since he does not see a clear network effect and perceives similar services across providers.
• He notes Remitly's very high reported growth (40%+ year-over-year) but sees an eye-popping PE ratio around 249-250 based on current earnings.
• He questions whether this is like early-stage car or railroad industries where many players exist and it's hard to pick winners, and whether they can grow into that valuation.

Stig's responses: flywheel narrative, competitive landscape, and normalized profitability

Management's stated moat: scale-based flywheel[40:02]
• Stig recounts that Remitly's CEO describes their moat as a flywheel: delivering fast, fairly priced remittances builds trust, which drives scale, which allows fee reductions, which in turn brings more customers.
• He notes one could see this as a potential race to the bottom on price, and also asks what happens when giants like PayPal decide to compete more aggressively.
Stig's concerns on strategic shift and competition[39:36]
• Stig likes Remitly when it is focused on being best-in-class at remittances for the underserved; he is less comfortable when the strategy broadens into areas where others are strong.
• He stresses the challenge of having to compete with companies like PayPal, which may have much greater capacity to suffer in a prolonged pricing battle.
Normalizing profitability vs headline PE[40:55]
• Stig explains that the extremely high PE is largely an artifact of being near an inflection point with minimal current earnings.
• He prefers to normalize margins for a company like this by asking what operating margin would be at scale and whether that is realistic, rather than relying on current EPS.

Valuation, dilution, and incentive structures at Remitly

Toby's question on valuation in light of comps

Difficulty of discounting cash flows for high-growth fintech[41:44]
• Toby notes that Western Union and MoneyGram have screened as value names for years due to competition, and asks how Stig thinks about Remitly's valuation given such comps.
• Stig contrasts his comfort discounting cash flows for a company like Sanofi with his discomfort doing so for a complex, rapidly evolving business like Remitly.

Stig's valuation framework and stock-based compensation concerns

Range of scenarios and intrinsic value estimate[43:58]
• Stig read hundreds of pages (10-K, six earnings calls, other sources) and still feels like he keeps discovering new, important details.
• He runs bull, base, and bear cases with probabilities and tentatively believes the stock trades at about a 50% discount to intrinsic value, though he stresses the assumptions involved.
Magnitude and implications of stock-based compensation[46:38]
• Stig strongly dislikes the level of stock-based compensation, which has historically exceeded 10% of market cap and is now just below 10% for a $3 billion company.
• He notes the CEO declined the last three stock grants amid scrutiny, and the company authorized a $200 million buyback program to offset dilution.
• Stig is critical of the narrative that buybacks fully offset dilution because the cash must come from somewhere and could otherwise fund growth opportunities.
Do employees really "think like owners"?[48:13]
• Stig questions management's claim that giving broad equity grants makes employees think like owners, especially in large organizations where performance-based stock is not tightly linked to individual impact.
• He suggests a better model might be cash bonuses tied to corridor-specific performance, potentially coupled with mandatory share purchases, to more closely align incentives.

Hari's comments on Silicon Valley norms and talent competition

Prevalence of heavy equity compensation[49:50]
• Hari notes that in many Silicon Valley tech firms, stock compensation often exceeds base salary and is the standard way to incentivize employees.
• He points out that buybacks at such firms often simply offset stock comp, a practice Buffett criticized long ago but which persists.
Competition for scarce talent and "green mail"[50:48]
• Hari cites examples of individuals with large language model skills at companies like OpenAI reportedly receiving $100 million offers, likening it to buying a one-person startup.
• He mentions past practices where companies paid high salaries and stock to talented people just to keep them on the bench and away from competitors, a dynamic he calls irrational but driven by abundant capital and intense competition.

Toby's investment pitch: Crocs (CROX)

Crocs business overview, leverage, and buybacks

Fit with acquirer's multiple strategy[58:12]
• Toby includes Crocs in his mid-cap value fund and seeks companies that could be taken private in a leveraged buyout.
• He views Crocs as a clear private equity-style opportunity given its size and cash generation.
Key financials and capital structure[58:07]
• Current market cap is about $4.3 billion, with an enterprise value of $5.9 billion, implying roughly $1.6 billion in net debt.
• Crocs generated between $900 million and $1 billion in free cash flow last year, so net debt is about 1.6x free cash flow.
• They have a $1.3 billion buyback authorization, roughly 25% of outstanding stock at current prices, and Toby hopes they are buying aggressively.
• The stock traded around $180 in 2022 and is now about $79, more than halved despite the business performing well.

Growth, international expansion, and margins

Recent growth metrics[59:35]
• Crocs grew 9% last year overall, with international business growing 16% year-over-year in the first and second quarters.
• China sales are growing 64% year-over-year, which Toby finds surprising given potential for copying.
Valuation metrics and margin profile[59:28]
• At current prices, Crocs trades at about 6x earnings with a roughly 21% free cash flow yield, while still growing around 9%.
• Gross margins are about 58%, which Toby likens to "tech margins" for a seemingly simple, easily copied plastic shoe.

Risks: Hey Dude acquisition, tariffs, and fashion cyclicality

Underperforming Hey Dude acquisition[1:00:11]
• Crocs acquired Hey Dude, another casual shoe brand, for about $2.5 billion.
• Hey Dude sales have declined 7-9% in the current year, suggesting the brand's fashion appeal may be fading.
• Toby notes that even if Hey Dude proves a total loss, the price paid is only about 2.5-3x Crocs' annual free cash flow, which he considers survivable.
Tariff exposure and manufacturing footprint[1:02:23]
• Crocs manufactures in Vietnam and China and is therefore exposed to tariffs on imports to markets like the U.S.
• Toby believes tariffs are a more serious problem than Hey Dude but still sees them as ultimately solvable through restructuring and pricing adjustments once rules stabilize.
Fashion risk and competition[1:02:01]
• Crocs' clogs are a fashion-driven product that has cycled in and out of popularity; when out of favor, the stock becomes extremely cheap.
• Competitors include Native shoes and Birkenstocks, which also offer casual, distinctive footwear.
• Toby did an informal channel check at his kids' Jiu Jitsu class and found about one-third of kids' shoes on the floor were Crocs, suggesting ongoing popularity.

Crocs: catalysts, upside vs risk, and peer takeout potential

Potential catalysts and private equity angle

Tariff resolution and operational execution[1:04:56]
• Toby argues that resolving tariff uncertainty and stabilizing Hey Dude could be significant catalysts.
• He emphasizes that investors will see clear signals in financials whether management is successfully addressing these issues.
Takeout comparables and PE-style valuation[1:06:56]
• Toby notes that another footwear company, Skechers, was acquired for around $13 billion (he acknowledges it's a different business model but uses it as a rough size comparison).
• Given Crocs' current enterprise value, he believes a financial or strategic buyer could pay a substantial premium and still achieve acceptable returns.

Discussion: product copying, China success, and fashion dependence

Hari's observations as a parent and on China IP risk[1:08:31]
• Hari sees many kids wearing Crocs in parks and his daughter owns several pairs, confirming strong consumer adoption in that segment.
• He is surprised Crocs has been successful in China given the country's reputation for copying IP such as microchips, and jokes they deserve a higher multiple for that.
• He asks if tariffs are the main uncertainty now and whether their impact is already baked into the price.
Toby's view on margins and tariff risk[1:09:09]
• Toby notes that Crocs' 58% gross margins may be somewhat illusory if tariffs significantly compress profitability, but current margins suggest tariffs haven't fully bitten yet.
• He reiterates that the main risk in his mind is fashion-we don't fully understand why the product is beloved, and that affection may change-but current sales and margins imply it remains attractive.

Stig's critique of Crocs: capital allocation, history, and monitoring

Hey Dude impairment and acquisition behavior

Impairment magnitude and optics[1:11:29]
• Stig notes Crocs acquired Hey Dude for $2.5 billion during COVID-era highs and later recorded an impairment of about $700+ million, roughly a third of the deal's value.
• He contrasts adjusted and GAAP numbers: excluding the impairment makes results look less brutal, but he still questions management's acquisition discipline.
Historical near-collapse and refocusing[1:12:03]
• Crocs went from more than $67 per share to less than $1 at one point, illustrating how sharply fashion and business fortunes shifted.
• The turnaround involved cutting non-core categories like sandals, rain boots, and apparel, closing locations, and refocusing on the core brand and product.
• Stig observes that after the refocus succeeded, they diversified again with Hey Dude and failed, raising concerns about repeating value-destructive acquisition behavior.

Fashion dependence, TikTok, and investment style

TikTok store success as double-edged sword[1:13:16]
• Crocs is currently the number one product in the TikTok store in the U.S., which management is excited about.
• Stig interprets this as a risk as well as an opportunity, because it underscores dependence on fashion-driven, fast-moving platforms where top rankings may be ephemeral.
Contrast with durable, unglamorous businesses[1:13:42]
• Stig contrasts Crocs with something like railroads (BNSF), whose economics are grounded in laws of physics rather than social media popularity.
• He notes that Crocs' 23% operating margin today was negative 10 years ago, underscoring the need to monitor trends and management decisions closely.
Need to plan exits and monitoring[1:15:30]
• For a stock like Crocs, Stig feels he must think about when to sell from the moment of purchase, because the thesis relies partly on multiple expansion and buybacks in a fashion-sensitive business.
• He distinguishes this style from a "set and forget" approach and underscores the extra work required to track whether Crocs remains cool and whether management is creating or destroying value.

Toby's closing comments on Crocs risk-reward

Perception vs reality of distress[1:16:16]
• Toby feels Crocs trades as if it were distressed, but with around $1 billion in free cash flow he does not believe the business is actually in distress.
• He acknowledges the risk of loss but believes the combination of low valuation, strong cash generation, buybacks, and potential fashion recoveries makes it worth owning, provided one monitors key risks.

Closing of mastermind discussion

Mutual thanks and future mastermind plans

Acknowledgment of differing risk profiles among picks[1:17:04]
• Toby characterizes Hari's Sanofi pick as a more certain, wealth-preservation-oriented idea and his own Crocs pick as the higher-volatility, higher-upside choice.
Looking ahead to next quarter[1:18:36]
• Stig thanks both Toby and Hari for the discussion and says he looks forward to the next quarterly mastermind session.

Lessons Learned

Actionable insights and wisdom you can apply to your business, career, and personal life.

1

When evaluating a "safe" stock like a large pharmaceutical, look beyond headline multiples to factors like product concentration, patent runways, recurring revenue streams, and management's capital return discipline.

Reflection Questions:

  • • What portion of my portfolio is dedicated to relatively stable, cash-generative businesses, and how diversified are their revenue streams by product and patent life?
  • • How can I better assess whether a company's dividends and buybacks are sustainable given its pipeline, R&D needs, and regulatory risks?
  • • Which of my current holdings deserve to be sized smaller because they rely too heavily on a single product or patent-protected cash cow?
2

In fast-growing fintechs, strong unit economics on paper are not enough; you must rigorously examine the durability of the moat, the strategic focus, and how equity dilution and buybacks affect your real share of future cash flows.

Reflection Questions:

  • • Where in my portfolio am I relying on optimistic growth and LTV/CAC assumptions without fully understanding competitive dynamics and switching costs?
  • • How might heavy stock-based compensation and subsequent buybacks in a company I own be quietly eroding my ownership stake or diverting cash from growth opportunities?
  • • What steps can I take this quarter to map out a clearer thesis on how each growth company I own maintains its edge against larger, better-funded competitors?
3

Consumer brands tied to fashion and social media popularity can offer deep value when out of favor, but they demand active monitoring of trends, management behavior, and capital allocation to avoid permanent impairment.

Reflection Questions:

  • • Which of my investments are most exposed to shifting consumer tastes or platform-dependent popularity, and how frequently do I reassess those theses?
  • • How could a large, seemingly strategic acquisition by one of my holdings change the risk profile-either by diversifying intelligently or by stretching management's competence?
  • • What concrete indicators (e.g., same-store sales, brand surveys, social media data) could I track to get early warning signs that a consumer brand I own is losing relevance?
4

Sector-wide mispricings often arise when capital crowds into fashionable themes, leaving boring but high-quality cash generators trading at discounts; disciplined investors can exploit this by comparing relative valuations and business quality across sectors.

Reflection Questions:

  • • Where do I currently see entire sectors trading cheaply relative to their history and to the broader market, and what might be driving that neglect?
  • • How could I build a watchlist of out-of-favor, high-cash-flow businesses in non-glamorous sectors to be ready when prices become compelling?
  • • What signals would tell me that I am being swept up in the latest narrative (AI, crypto, etc.) instead of focusing on steady, less exciting compounders?
5

The way management designs incentive structures-especially equity grants versus performance-tied cash-profoundly shapes behavior, so investors should treat compensation design as a core part of governance and capital allocation analysis.

Reflection Questions:

  • • For my largest holdings, do I know how key executives and mid-level operators are actually compensated, and what behaviors that pay structure rewards?
  • • How might outcomes differ if a company shifted from broad, time-based stock grants to more targeted, performance-based cash bonuses with optional stock purchases?
  • • What one change in executive or employee incentive design would I most like to see at a company I own, and how would that likely affect long-term capital allocation quality?

Episode Summary - Notes by Hayden

TIP767: Mastermind Discussion Q4 2025: Sanofi, Remitly & Crocs w/ Stig Brodersen, Tobias Carlisle, and Hari Ramachandra
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