Fundamentals Still Matter: Lone Pine’s David Craver
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Welcome to another episode of Goldman Sachs Exchanges with great investors. I'm Tony Pascarello, global head of hedge fund coverage in Goldman Sachs Global Banking and Markets. And today, I have the pleasure of sitting with David Craver. Dave is the co chief investment officer of Lone Pine Capital, an investment firm with over 19,000,000,000 in assets under management and a focus on long term fundamental based investing. Dave, welcome to Great Investors.
Thank you for having me. It's an exciting time.
You joined Lone Pine in 1998. I think listeners, people close to the markets will be familiar with the broad changes to the industry since then. So the rise of passive, the rise of private markets, increased regulation of the banks following great financial crisis. What in your mind, what's been the impact of these changes on the market itself?
Well, I would say there's been two things that I would point to that are different today than when I first started in the business. One is single stock volatility around events is greater than it ever has been, and it's often not correlated with what I view as the actual qualitative news that's happening. So that's pretty different than it used to be. I've told I've told our partners that I used to be able to read a press release and tell you what the stock was gonna do the next day, and and that is no longer the case. And often the moves around events are quite large relative to what a fundam
It's interesting because I think I want a lot of people, whether they saw it or didn't see it, think of the late nineteen nineties, particularly '98, '99, and what became the peak in 2000 as huge volatility Yeah. Huge overvaluation. Yep. But in a way, your compare and contrast is today almost feels more there's almost more rock and roll today than there would have been back then. Is that fair?
Yeah. That that is fair. It's super interesting in that take the mag seven as a subset of the market. There are several companies in in that group that I consider fundamentally undervalued, and there are several that I consider absurdly overvalued. But I think I do think that is partly a function of the, you know, passive flows that we've seen in the market over the last many years. And, yeah, there's there's plenty of froth in the markets today, but there's also plenty of opportunity. And as I said earlier, it's an exciting time.
So a natural follow on question is what does this mean for what you do? What are these changes to the market market structure mean for what you do? Yep. And and so in the end, has it created a better or worse opportunity set for someone like you who is a long term bottom up fundamental investor?
Yeah. So I would argue it it is better for me. There are fewer people active in the market that are taking fundamental views on valuation. The passive flows, by definition, are not taking taking a view on valuation. And then the rise of the multistrats are more of a relative game. It's a levered relative game. It's not typically, you know, singularly focused on a company's company's value. So my firm is leaning into the what we consider to be the white space, which is thinking and acting with duration and viewing valuation through that lens, which I think is different than a lot of
people are doing today. And if if I were to say I think in a way you just led me to my next question, which is if I were to ask what makes Lone Pine unique Yep. Is that it? Is that part of it? How would you answer that question? There are several things I would say there. One is I have a very small research team. So I I like to say
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