Where Value Still Lives: Evan Tindell

An engaging conversation with Evan Tindell from Bireme Capital on what real value means in investing using Japan as a case study and how AI is transforming roles across industries. We also dive into what it truly takes to stand out as an investor in today’s world.TL;DRInvestment Focus on Japan: Emphasizes undervalued firms like Daiwa Industries, worth $500M, with strong cash positions.Software Sector Insights: Japanese software companies offer attractive PE multiples compared to expensive US firms, despite AI challenges.AI in Investing: Simple algorithms remain effective; AI tools aid in research but don't replace professional investors yet.Behavioural Market Trends: Caution against conflating speculative behaviour with investing skill; prediction markets offer insights but require scepticism.The discussion with Evan Tindell focused on identifying undervalued market opportunities, particularly in Japan, and understanding evolving software industry dynamics.Japan’s investment appeal centres on undervalued companies with strong cash positions and improving corporate governance, despite an aging populationEvan highlighted Daiwa Industries, valued at approximately $500 million with an annual EBIT of $50-60 million and $400 million in net cashThe company’s ownership structure limits private equity intervention but ongoing regulatory reforms and activist funds are expected to reshape the market over the next decadePrivate equity interest in Japan is growing, with more funds and assets focused there than ever before, driven by a shift in market culture and regulatory easingSoftware sector challenges were discussed with emphasis on the impact of AI and market valuation correctionsCertain Japanese software companies trade at single-digit PE multiples net of cash with low churn and moderate growth, presenting attractive investment opportunities versus expensive US counterpartsCost declines in technology development, such as low-code/no-code solutions, create efficiency pressures but also raise questions about future profit margins for traditional software firmsThe market is skeptical about software firms’ ability to maintain margins amid easier customer self-service and growing open-source alternatives, though support and security services still hold valueThe discussion highlighted behavioural trends in markets, gambling parallels, and the influence of prediction markets on decision-making.Evan noted a current peak in speculative behaviour and gambling disguised as investing, cautioning against conflating enthusiasm with skill or knowledgePrediction markets like Polymarket serve as useful aggregators of public sentiment and probability but remain a form of gambling with some information advantageEvan explained that the best odds come from people betting money on opposite outcomes, which often align with real probabilitiesThere is a potential risk, though limited, that these markets could influence political actors’ behaviour if they become widely monitored, especially in fragile regimesEvan speculated on scenarios like coups where prediction markets might serve as coordination signals for conspiratorsOverall, Evan sees prediction markets as a helpful tool in gauging probabilities but advises skepticism about their direct impact on major policymakingDisclaimer: This podcast is for informational and educational purposes only and does not constitute financial, legal, or investment advice. The views expressed by the hosts and guests are their own and do not necessarily reflect the views of Bireme Capital or any of its officials. Nothing in this podcast should be construed as a solicitation to buy or sell any security or fund. Listeners should consult with a qualified professional for specific advice tailored to their individual circumstances. We are not responsible for any losses or liabilities incurred by acting on information from this podcast.