On this week's Stansberry Investor Hour, Dan welcomes value investor Tobias Carlisle back to the show. Tobias is the founder and portfolio manager of Acquirers Funds, a deep-value investment firm. He's also an author and host of the Acquirers Podcast.

Tobias kicks things off by discussing the "happy hunting ground" in small-cap stocks, the market narrowing in the S&P 500 Index, and the massive amounts of capital flowing into AI. He also compares the AI mania today with the dot-com boom of the late '90s, questions how AI is making money, and notes that the bottom 490 stocks in the S&P 500 have been in a "little recession" since 2022. He says this gives value investors an opportunity right now to get great names for cheap before the inevitable rebound. After that, Tobias comments on passive investing, what could be in store for the top 10 large caps, and why fears of AI destroying the jobs market are overblown...

Since the dawn of the Industrial Revolution, there have been people smashing the weaving machine because that was putting people out of business back then... [But] all of these thousands... of different types of jobs created by every one of these innovations, that's what people are ignoring now. There are going to be lots of different jobs that we can't possibly conceive of, just as there are jobs in the last few years we couldn't have conceived of 10 years ago.

Next, Tobias talks about his company's two funds: the Acquirers Fund (ZIG) and Acquirers Small and Micro Deep Value Fund (DEEP). He explains what he looks for when picking stocks and how he determines valuations. He also name-drops many stocks and industries that he thinks have fantastic potential over the next decade. Tobias says...

All of the indicators that I see suggest we're in that late 1990s sort of bubble-ish market for large growth. And the things that are left behind are small value. And I think that that's where the opportunity lies, probably for a decade or so. And so I'm incredibly excited about the opportunities that we're seeing right now. I think it's a good time to be a small value investor.

Finally, Tobias discusses the significance of hedge-fund shorts of the small-cap Russell 2000 Index peaking recently, plus the extreme concentration of the top 10 stocks. He notes that Nvidia now accounts for 8% of the S&P 500's market cap – the highest in history. Tobias says that valuations will eventually come back down to Earth and that not all of the Mag Seven will be top performers in the future. Citing Tesla as the weakest in the group, he points out that Chinese electric vehicles beat Tesla cars in terms of price, design, and charging times. Tobias then closes things out with a conversation about an "echo boom" of 2021, cryptocurrencies being back in favor, and the unprecedented outperformance of large caps...

You want to be a handicapper rather than picking the best horse... Over the very long run... small [cap] relative to large [cap] has outperformed by 20 times going back to 1926. And that's an extraordinary outperformance. Since 2011, it has underperformed by about 75%. Where we've seen underperformance [in small caps] historically, it has always been around these notorious bubble peaks.

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The transcript is coming soon.

This Week's Guest

Tobias Carlisle is the founder of the Acquirer's Multiple and Acquirers Funds. He's also the author of several books, including his latest one, The Acquirer's Multiple: How the Billionaire Contrarians of Deep Value Beat the Market.

Tobias' previous experience includes an analyst at an activist hedge fund, general counsel of a company listed on the Australian Stock Exchange, and a corporate advisory lawyer across various industries in multiple countries. He is a graduate of the University of Queensland in Australia with degrees in law and business (management).