Today, I’ll be doing something a little different. Recently, Maj Soueidan and the good people at Skull Sessions reached out to ask if they could interview me, and I agreed. We spoke about the work I’ve been doing with The Owner’s Memo, why I think it’s important, and what I hope investors learn from the work.
I’ve reproduced the interview below, and you can also find it at the direct Skull Sessions link. Enjoy.
We like to be Monday morning quarterbacks. It’s easy to go back and say “wow I could’ve had that Multi Bagger had I known about it.” However, that doesn’t re-create the emotional and analytical decisions you need to make when you introduce uncertainty into the equation that every investment has before you make it, to some degree.
What can we learn from studying the investments of great investors, and how much of their success comes down to doing the work that others overlook?
Those questions sit at the heart of Tim Isgro’s The Owner’s Memo, where he reconstructs investments made by investors such as Li Lu, Eddie Lampert, and Mohnish Pabrai.
Rather than simply looking back at a successful stock and explaining why it went up, Tim digs into the original filings, historical reports, and information available at the time to recreate the uncertainty, research, and judgment behind the investment decision. His goal is to make these case studies useful for investors facing their own decisions today.
Tim also brings an institutional investing background to this work, including experience as a portfolio manager and Chief Investment Officer, alongside an academic foundation in physics and a deep interest in fundamental investing. But he’s also willing to question whether studying investing can become a distraction from actually doing it.
In our conversation, we discuss what his research has taught him about finding exceptional investments and why he believes a handful of outstanding companies can make all the difference. We also cover how he uses AI to improve his research process without outsourcing the judgment that investing demands.
We also get into three companies that have caught his attention: Clear Secure (NYSE: $YOU), Remitly (RELY), and Indivior Pharmaceuticals (INDV).
Tim explains what makes each situation interesting, from improving economics and operating leverage to a potentially consequential merger. As always, these are ideas to investigate, not investment recommendations. We hope you enjoy this conversation with Tim Isgro.
Skull Sessions is a collaboration with Geoinvesting.com, a full-stack microcap research platform and MS Microcaps LLC , home of the Microcap Quality Index (MSMqi).
1. You’ve gone from institutional investing and portfolio management to writing The Owner’s Memo, where you “reconstruct investments made by investors like Mohnish Pabrai, Li Lu, and Eddie Lampert.” What has studying these investments in detail taught you about how great investors actually make decisions, versus how we tend to describe their process in hindsight?
I’ve always had a sense that reading and studying could reveal big insights about the world that I could use in my life. I’m fond of Charlie Munger’s statement that “There are answers worth billions of dollars in a $30 history book” (Poor Charlie’s Almanack). The statement extends beyond history books, too.
I started noticing years ago that, for a student of investing, there were many examples of great investments from the past, but most case studies written online about them were too hollow. The author might spend a few paragraphs discussing the state of affairs and then how much the stock price went up afterward. Direct interviews with investors themselves are rarely better. They will often explain, with crystal clarity, why a stock was cheap and give mere lip service to any concerns. Sometimes, they even forget or mildly misreport the situation.
I wanted to create case studies that could make the reader feel the tension in the investment decision and just how much investigative work it would have taken. I try to create my case studies with as much detail as possible. Exactly what source would Li Lu have been looking at? What data provider tracks shipping vessel prices and in what detail?
I think good case studies are to investing what practice is to an athlete. They can prepare you for the real thing, helping you to remain calm and clear-headed under pressure. They can remind you of what successful investing can look like.
As to your question, doing case studies has taught me that, to some extent, each investor is different. For example, Charlie Munger reported that he made the decision to invest in the stock and bonds of Tenneco in about 90 minutes after reading a news article. Eddie Lampert, on the other hand, only invested in AutoZone after sending an analyst across the country to different auto parts stores to see first-hand what he was reading in the annual reports. Personally, I think working hard is paramount; leaving no stone unturned in research is important. But I also understand that many great investments may be made simply with one or two critical pieces of information that are practically shouting the obvious.
Case studies can show us the varied landscape of investing, teaching us the range of styles that can succeed and thereby allowing us to express our own style comfortably, while also showing us the behaviors that are best avoided, like buying at too high a price on the hope of higher earnings.
2. I’m really curious if you think that there’s a point where studying investors becomes counterproductive to what you’re trying to achieve as an investor?
Yes, there is. In this case, and in others in life, it is important for an investor to know themselves. I was a good student when I was in school, so reading and studying are natural places for me to go for comfort. I have to remind myself often to be biased toward taking action. That doesn’t necessarily mean buying stocks, but it does mean, for example, that I should spend more time searching for current investment ideas than crafting case studies. Lately, I’ve been writing more about current ideas.
For other investors, the same lesson might imply an opposite conclusion. If you are highly gregarious, you might love discussing ideas with colleagues and make that a natural part of your investing process. But you may also suffer from hearing too much excitement when a stock price is high or too many identical worries when the price is down, and a healthy dose of reading more, case studies or otherwise, could better help you craft your own opinion.
3. A lot of your work involves going back to the original filings, Value Line reports, and contemporary information that was actually available when an investment was made. How important is it to recreate the information set an investor had at the time? What do investors get wrong when they study an old investment using information that only became available later? Do you find the reconstruction process difficult? By the way, you had me at Value Line. That was my “bible” when I first started investing after reading Peter Lynch’s book - One Up On Wall Street.
Value Line is great. I still use it to generate some good ideas or get a quick feel for a stock.
Case studies can be a great way to learn how to invest well. But they suffer from a big problem: in choosing a case study, we’re often picking out investments that we know turned out successfully, and that naturally colors the way we look at the investor’s decisions. We may be inclined to dismiss concerns too easily, knowing that, if we’re challenged, we can fall back on the fact that the investment worked well.
One way to reduce this effect is to strictly limit ourselves to using only information that was available before the investment was made. In that way, we eliminate the potential for cheating. For example, we might read some old company reports and hypothesize that the company’s margins would have increased in the future. If we don’t limit the information available, we may be tempted to look to future company reports to see if we were right, and if we’re wrong, we may dismiss the idea completely instead of learning why we were wrong. Yes, the reconstruction can be tedious and difficult, but it’s necessary to craft a good case study.
I try to develop a complete picture with the limited information, complete with pros and cons, write those down, and present them honestly. For example, in a three-part series I wrote about Li Lu’s investment in the Russian company Lukoil after the fall of communism, I spoke about the risk that corruption was rampant in Russia and the rule of law was lax. I believe Li got comfortable at the time because of the extreme cheapness of Russian stocks, and I suggested that a mild catalyst in the form of changing politics helped him too.
But I didn’t present that as definitive and future developments actually proved it was a significant risk. There is a valuable lesson in confronting challenging evidence or the lack of evidence and not trying to squash it. It lets us get comfortable with feeling the uncertainty present in any investment and learn what levels of uncertainty are appropriate and what levels are too much.
4. In your Timberland and AutoZone (NYSE: AZO) case studies, you highlight very different ways an investment can produce exceptional returns: business improvement, multiple expansion, reinvestment and buybacks. When you look at a potential multi-bagger today, which of those sources of return do you find most attractive, and what characteristics make you believe the opportunity has a long runway?
In Part Three of my Timberland case study, I recounted how Li Lu multiplied his money by 6 to 7 times in two years. Then, I broke down the two things that contributed to that return: an increase in the earnings per share of the company and an increase in the P/E ratio of the stock.
The suggestion to extend the case study to three parts came from a friend of mine who runs his own hedge fund, and I thought it was a great idea. Li’s investment ran from October 1998 to October 2000, and his return came one-third from the company increasing its EPS from $4.37 to $8.10 and two-thirds from the P/E multiple of the stock expanding from 6.6 to 22.3. (Buybacks can help increase EPS, and reinvestment in the business can too, in addition to having a knock-on effect on the P/E ratio.)
A good equity investment can come with either one of these increases or with both.
An intrepid investor can find stocks trading at low P/E ratios that seem bound to improve, like Li did with Timberland. Doing so is likely to involve a lot of work verifying that any concerns the market might have are overblown.
He or she can also find stocks that seem bound to increase their earnings per share because of a great moat the company has built. Paying a “fair price” for such companies can often work out great.
But the truly fantastic investments, the ones that an investor need only find one or two of to become very rich, combine both.
In my article, I used the example of Microsoft from 2010 through 2025. During that time, Microsoft’s earnings per share increased from $2.10 to $13.64, and its P/E multiple increased from 8.2 to 36.3. The result: the stock price increased 28.5 times, and an investment in the stock returned 25.7% per year.
One could make similar observations about Apple, Costco, Home Depot, Nvidia, and many other great companies over various long timeframes. Saying it like this makes it sound easier than it really is, and that’s part of the reason I love to study investing. Can I find those investments, wait patiently until they become screamingly cheap on my estimate of earnings, know the company well enough to expect earnings to grow, act in size when they appear, hold through countless concerns and the bombardment of news, and then sell at the right time?
5. You’ve written about using AI and software to build tools for your own investment process. Where has AI genuinely improved your research process, and where do you think investors are overestimating what it can do? Has building these tools changed the way you spend your time as an investor?
Over the past year, I’ve vibe-coded about ten small apps, and some of them I use every day or every week. The one that’s made the most difference to me is a front-end app for the SEC EDGAR database that I created using Claude. The native SEC interface isn’t very good for bulk work or speedy work, and the good existing tools cost a bit too much or have some shortcomings in layout or performance. In a few hours of work and perhaps twenty prompts, most of which were fine-tuning, I created an app to access and download company filings quickly. It works just the way I want it to, and it’s saved me a lot of time and frustration. You can see my app in the article you mentioned.
Lately, I’ve been experimenting with some agent capabilities to help me curate all the information I’d like to work through. That is pretty promising.
I’ve found that owning the work like this helps me to enjoy the work, and enjoying the work draws me to it. If I used another tool that was a little slow, for example, I’d be more likely to avoid pulling up a 10-K or an 8-K to quickly check something, and, as such, I might miss an investment idea.
I also use the chatbots to quickly get up to speed on a new topic. I wrote a piece about Mohnish Pabrai’s investment in the shipping company Frontline, and I needed to learn about the shipping industry to do so. I started by reading Frontline’s 10-K and some parts of the great textbook Maritime Economics by Martin Stopford. I also asked ChatGPT and Claude questions along the way, and the combination sped up my pace of learning. I did not start with the chatbots, and I think that’s important for the work I was doing.
I also use these tools to proofread the articles I write. Proofreading is becoming a lost art, and I think the vast majority of people would benefit from doing it even a little, even in simple communication like texting or emailing. Yes, I proofread my texts. Proofreading helps me think better, and it shows my readers or counterparties that I care about their time.
On the question of overestimating what AI can do, the tools still struggle with having taste. Because they were trained on the corpus of internet text, most of which is mediocre, the models seem to gravitate to text and designs that are themselves mediocre. Good taste is rare by definition; if something beautiful becomes commonplace, it ceases to be impressive. In using the models, I remind myself that, until model makers train these models specifically for taste, I cannot outsource creativity and matters of taste to them, and investment decisions fall into those categories to a large degree. The models are great at summarizing swaths of information, which is helpful for learning, and they may be partly helpful in screening ideas based on factual information, but they cannot yet reliably tell an investor what to invest in. My pet theory is that, because investing is a competitive, dynamic game, they will never be able to do so en masse, only in limited capacity, the same way there are a limited number of wildly successful human investors.
6. You wrote a piece titled “I Don’t Know,” arguing that one of the most important skills in investing is knowing when you shouldn’t have an opinion. How do you distinguish between something that is genuinely outside your circle of competence and something that simply requires more work to understand? And how do you keep that discipline when an investment opportunity appears particularly attractive?
I haven’t yet found an objective answer to that first question. I think a good investor needs to work hard, read widely, learn as much as he or she can, and gain experience. When I’ve learned enough, I may get a feeling similar to ones I had with other successful investments or those times when my knowledge impressed someone I respected. If something isn’t clicking, I feel uneasy. For me, one sign that I know an investment or subject deeply enough is that I can react to developments completely on my own, without my mind drifting to worry about what another expert might say. These descriptions are nebulous, of course, and I suspect that’s the best a good investor can hope for.
To maintain discipline and avoid purchasing stocks I don’t know enough about, I sometimes use the following mental tool. I try to imagine myself six months forward. I pick out the aspect of the company I am most uncomfortable with; let’s say it’s subscriber growth. Then, I imagine subscribers down some modest amount, but the stock down 30%. I imagine the actual unrealized dollar loss. How would I feel? Would I still be enthusiastic about the company and stock?
7. In “A Study of Exceptional Companies,” you look at Bessembinder’s research showing just how concentrated long-term wealth creation has been among a very small number of companies. How does that finding affect the way you think about portfolio construction? Does it make you more willing to concentrate when you find an exceptional business?
As you suggest, of the 25,332 companies in Bessembinder’s study, only 1,092 of them (4.3%) produced all of the net gains when compared to a competing investment in one-month Treasury bills. In other words, the stocks in the 90-year study can be divided into three groups:
those that produced dramatic outperformance vs Treasuries (1,092 stocks or 4.3% of stocks),
those that produced only modest outperformance (9,579 stocks or 37.8% of stocks), and
those that underperformed Treasuries (14,661 stocks or 57.9% of stocks).
In Bessembinder’s work, the author concluded that, because there were so few companies that performed incredibly well, with the rest putting up only middling or, worse, terrible performance, an investor had better be diversified to effectively guarantee they’ll catch a few of those great companies in their portfolio. By avoiding a concentrated portfolio, the investor avoids the risk that the few stocks they own land in the middling (or terrible) group, as most do.
In writing “A Study of Exceptional Companies,” however, I came to the opposite conclusion. Since my goal is to dramatically outperform as an individual investor, I need to find, understand, and own those exceptional companies or exceptional investment opportunities. Concentrating my portfolio is the only practical way to do that. As Bessembinder points out, exceptional companies are rare, and that fact, I believe, defines the work an investor must do to outperform. They should spend their time searching through as many ideas as possible in order to find the few great ones. (The numbers above suggest that one might need to rifle through 96 mediocre or bad ideas to find just four great ones.) Most of the work of being a great investor should result in no action at all, but then, when a great idea surfaces, we need to pounce. Owning too many companies increases the risk that I don’t know any of them well enough and that they turn out to be mediocre or worse.
Lastly, I don’t want to leave the impression that I believe I am right and Bessembinder or others are wrong. I think you can tell from my descriptions above that either interpretation could be correct, and where you land on this question will depend, in part, on the goals you have for your investing.
8. Please give us one person you would like to see us interview.
There is a small population of great investors around the internet, some anonymous and some not, many of whom enjoy sharing ideas. I recently started following Jeremy Raper (@puppyeh1) on X. That would be an interesting one.
9. Let’s talk about what you’re working on today. Where are you finding interesting opportunities, and can you share up to 5 companies or investment situations that you think deserve more attention from fundamental investors?
I just finished writing a series about companies with the best returns on invested capital, based on a great paper written by Michael Mauboussin and Dan Callahan. It was popular because I dovetailed it with a few investment ideas that readers might find interesting today.
One was Clear Secure, Inc. (ticker: YOU), which is a secure identity company best known for the CLEAR+ security subscription service that provides travelers a more convenient security experience at airports. They also have other security products, like a similar offering for stadium security and a B2B product for identity verification.
As of October 27, the company had a market cap of $6.2 billion, an enterprise value of $5.4 billion, and a stock price of $45.55.
Its latest quarterly revenue was $277.8 million, up 26.6% year-over-year. The company’s total number of CLEAR members (the free tier) grew to 43.5 million, up 30.0% year-over-year, and the number of active CLEAR+ members grew to 8.3 million, up 15.2% year-over-year.
Moreover, the company’s margins have been continuously rising. Its latest quarterly financial report exhibited a 68.6% gross margin (up consistently from 58.5% since Q3 2021) and a 29.9% operating margin (again, up consistently from -48.2%).
At a market cap of $6.2 billion and earnings of $72.3 million for the quarter ended June 2026, the company trades at a P/E on annualized earnings of 21.4x, with quarterly earnings that were up 86% year-over-year. That may prove cheap if the company can continue its growth and keep capitalizing on the operating leverage.
In the same article, I also wrote about Remitly (ticker: RELY), which is a financial services provider known for the remittance service it has built since it was founded in 2011. It has a footprint in over 175 countries and 10.2 million active customers as of Q2 2026. The company has grown remarkably over its life and since its IPO in September 2021.
It trades at a market cap of $5.08 billion and a per-share price of $24.01 as of October 27 with 211.7 million shares outstanding. The company produced operating income of $66.7 million in the most recent quarter, up from $14.6 million twelve months earlier.
Remitly’s business is one that benefits from economies of scale and, to some degree, from network effects (which help enable the spectacular growth the company has achieved). These scale economies and the resulting operating leverage can be seen clearly in the company’s income statements from the past few years. Its operating margins have increased from -18.5% in 2022 to 9.5% over the trailing twelve months. They seem poised to continue increasing.
The stock trades at a pro forma P/E of approximately 25 times on annualized and normalized recent quarterly results. If Remitly continues to take share from older incumbents, like Western Union and MoneyGram, growth with operating leverage should continue, and 25 times may prove cheap.
The last name I’ll mention requires a little more thought and has a special-situation-like characteristic.
Indivior Pharmaceuticals (ticker: INDV) is a pharmaceutical company specializing in the development, manufacture, and sale of prescription drugs for the treatment of opioid-use disorder. Its core product, SUBLOCADE, is a once-monthly injectable medication that holds a leading 76% market share in the long-acting injectables category. Company revenues have been increasing as a result. Over the last twelve months, the company captured $1.3 billion in revenue, up 13.6% year-over-year.
The company has a market cap of $4.1 billion, an enterprise value of $4.4 billion, and a stock price of $34.69 as of October 27. Management has also been focused on cost savings, which has resulted in operating margins increasing from negative levels in 2022 and 2023 to 30.2% over the last twelve months. Operating margins for Q2 2026 came in even higher, at 46.6%. For the full-year 2026, management is forecasting a continued surge in cash flow, with their measure of adjusted EBITDA up 68% year-over-year to a midpoint of $720 million.
Those facts make Indivior somewhat interesting, but that profile isn’t unusual for a pharma company without a strong pipeline. However, what caught my eye here is that Indivior has agreed to a merger with another company, Supernus Pharmaceuticals, which has a robust pipeline but is not yet profitable.
Management has guided that the cost synergies from the merger should produce $125 million in expense savings for the combined companies. With Indivior forecasting adjusted EBITDA of $720 million and Supernus sporting the opposite, a trailing-twelve-month EBITDA of -$28.8 million, those cost savings mean that the combined company should have a rough (adjusted) EBITDA around $816 million. (The companies’ merger announcement is even more optimistic, projecting a pro forma adjusted EBITDA of $888 million.)
In addition, Indivior plans to pay a special dividend to its shareholders of $1 billion prior to the closing of the merger, financed in part by a $650 million term loan.
Obviously, a lot more work should be done on both businesses, but the situation is certainly interesting.
Disclosure: I may have a position in any company mentioned. This is not investment advice; please do your own research.
Great interview, Tim! You should know write a case study on Lampert's Sears investment.