In today’s episode, Shawn O’Malley (@Shawn_OMalley_) discusses how companies can age just like people, how to define and understand the corporate life cycle, why the corporate decline phase is both inevitable and almost always poorly managed, how to invest across the corporate life cycle, plus so much more from studying Aswath Damodaran and recent research from Michael Mauboussin & Dan Callahan of Morgan Stanley.
Aswath Damodaran is a renowned professor of finance at NYU who recently published a book on corporate life cycles. Shawn pulls from Aswath and other sources in painting an actionable picture of the corporate life cycle and how it affects investors while also diving into case studies on three aging companies: Intel, Walgreens, and Starbucks.
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IN THIS EPISODE, YOU’LL LEARN
00:00 - Intro
02:18 - Why companies age
07:37 - What the corporate life cycle looks like
18:03 - How companies can age gracefully (and why most don’t)
23:35 - How Intel, Walgreens, and Starbucks face different and similar challenges of aging
29:23 - Which declining stock Aswath Damodaran is investing in
34:31 - Investing strategies based on the corporate life cycle
36:59 - Why it’s important to diversify across the corporate life cycle
43:19 - Why younger companies carry more duration risk
And much, much more!
*Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences.
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