In one sentence: A rerun of 340, in which Phil and Danielle ask what you actually own when you buy Formula One's parent Liberty Media; Danielle says Formula One is predictable but the ownership structure and debt stop her. Only the short intro is new.
Key ideas
- Rerun. The talk is the same as 340, which has the full notes. The new part is Danielle's intro: she is unwell, it is Labor Day and an F1 weekend, and the episode is "two years ago" (recorded in autumn 2021). [00:00–01:30]
- New framing. Danielle says other sports may take F1's place in your investing practice, and it's fun to listen back and see what has changed since. [01:00]
- Find out who owns what you enjoy. Phil's anecdote: watching races led him to ask who owns F1. Liberty Media (John Malone's group) bought it, and Phil had avoided Liberty because of its debt. [10:00–12:00]
- Simple and predictable. The first screen is Ackman's eight principles, and Danielle points to the first item on Phil's checklist. F1 passes on "will it be bigger in 10 years" but it is hard to know what you own, because rights are split between several bodies. [16:00–29:00]
- The debt trap. A clause tied to a minimum number of races (about 16) nearly caused trouble in 2020; management barely cleared it. [29:00–33:00]
- Debt changes the price you pay. Phil's preview: cash of about $700 million against $4.1 billion in loans gives $3.4 billion of net debt, so a $4.6 billion purchase meant about $8 billion all in. The idea continues in 481. [35:00–37:00]
How it maps to RuleOne
- See 340. Debt on the stock page is where Phil's net-debt arithmetic starts.
Buffett, Munger and Graham links
- See 340: Ackman's checklist, and the Innovation Stack (Jim McKelvey) for entrepreneurial near-death moments.
Words to know
- Net debt: debt minus cash that isn't needed for working capital.
- Tracking stock / multiple share classes: different share classes tied to parts of one company, as at Liberty.
Try this
Choose a company whose products you enjoy. Find who owns it and its debt, and write one sentence on how it makes money and whether debt or structure would stop you buying.
Check yourself
- What is new compared with 340?
Answer
Only the intro: Danielle's note that it is a rerun and why she chose it. - Why did the number of races matter?
Answer
A debt clause was tied to holding a minimum number during the pandemic.
Short quotes
"Who owns Formula One?" (Phil, ~11:00, auto-transcribed)