Bismarck Brief Outperforms the Stock Market
Three years of data show the stock price performance of publicly-traded companies after they are profiled in Bismarck Brief. Live player-led companies outperformed by far.
This week marks the 150th Bismarck Brief. It is a natural point to treat the Briefs like a data set of their own. To a degree, it allows us to evaluate our own analytic performance. For example, one interesting and easily-answered question is: what happens to the stock prices of publicly-traded companies after they are profiled in Bismarck Brief?
Above is a graph of the share price performance of every publicly-traded company covered in Bismarck Brief since the date it was covered to September 1, 2024. Bismarck Brief is not financial or investment advice (see full disclaimer below).1 But, generally, a positive assessment of institutional functionality or live player strategy in the context of business will eventually be reflected by the wider markets as well, as the fruits of such functionality become widely recognized.
If one had invested the same amount of funds into each company that Bismarck Brief positively assessed on the date the corresponding Brief was published, one would have invested 27 times and the total investment would have grown by +51%. Had one instead invested into the S&P 500 the same number of times on those same dates, it would have grown only +31%. Had one taken the same total amount of invested funds and instead put them into the S&P 500 all at once when the Brief began publishing, then left them alone, the total investment would have grown only +25%.
The most striking figure was that, if one had invested the same amount of funds only into the twelve companies Bismarck Brief positively evaluated specifically as live players, one’s total investment would have grown a staggering +105%, compared to just +36% for the S&P 500. Not a single company assessed to be a live player saw negative performance. Such figures suggest the attentive Brief reader is well upstream of the passive market investor.
The Brief only evaluates institutions that are plausibly strategically important, so the decision to profile a company at all means it is worth attention, whether or not its valuation subsequently grows or declines. If one had invested the same amount of funds into each company Bismarck Brief covered, whether positive or negative, one would have invested 37 times and the total investment would have grown by +39%, compared to +31% for the S&P 500.
Every investment strategy is necessarily far more idiosyncratic and developed in practice than this simple thought experiment. But this shows that Bismarck Brief can provide a unique and useful perspective for investors that is upstream of markets, even though our focus is exclusively on investigating the structures of institutions and strategies of live players.
Nvidia, by far the best performer, is an excellent qualitative example. Readers of Bismarck Brief were made aware of the company’s central importance to the booming artificial intelligence sector on December 14, 2022. That date was just weeks before Nvidia’s market capitalization began a meteoric rise that saw it become the most valuable company in the world—worth $3.3 trillion—in June of this year. From the day the Nvidia Brief was published to September 1, 2024, the value of Nvidia stock increased by +510%.
Nvidia is a positive outlier. But so was the Brief’s exceptionally positive assessment of Nvidia’s technological leadership. The Brief concluded:
[...] insofar as the computationally intensive deep learning model of AI is the most promising to usher in an AI revolution in technology and industry, Nvidia is one of the most promising companies poised to benefit from it.
Jensen Huang has shown an ability to undertake long-term, highly risky changes in strategy and achieve a massive payoff that places Nvidia at the center of a very promising market and justifies its enormous valuation. Increased governmental constraints through antitrust and export controls constrain Nvidia’s future vertical integration, but should not hinder its expansion based on its current model, so long as demand for powerful GPUs and other chips continues to increase. Nvidia’s enviable position is leading many would-be competitors to challenge it, but so long as Jensen Huang proves to be a live player while in charge of the company, Nvidia will probably be capable of weathering any competition, whether by simply outcompeting established giants or buying out small startup challengers.
Many have an instinctive resistance to the idea that the greatest financial returns accrue from just a few bets that, years down the line, become perceived as obvious in hindsight. There is a sense that it couldn’t be, or shouldn’t be, so simple. Yet careful observers of both startups and stock markets have long known that the most outsized financial returns always come from just a tiny few paradigm-shifting companies led by live players. It was not luck that determined that Bismarck Brief would investigate Nvidia before the company captured the attention of the world’s investors, but our methodical investigation of the organizations making the world’s most dazzling technological advances possible—a few weeks after investigating Nvidia, we also investigated its key manufacturer, TSMC, which is now up +103%.
Day in and day out, the team behind Bismarck Brief tirelessly searches for the world’s most technologically and strategically impactful companies. I warmly invite those who wish to know the results of our search, in detail and every Wednesday at 2pm GMT sharp, to become paid subscribers today:
After Nvidia, the second-best performance came from Meta, whose stock price has more than doubled since Bismarck Brief examined it on February 15, 2023. Here the Brief staked out a contrarian position against the prevailing negative sentiment about the company’s foray into “the metaverse”—Meta’s stock price had collapsed to just a quarter of its 2021 peak at the time. The Brief concluded that Mark Zuckerberg had consolidated control and was seeking to effect a revolution in the hardware and software of computing devices. While success remained an open question, this was a good reason to be positive on the company’s future. Sentiment on Mark Zuckerberg and Meta has since greatly changed for the better following impressive tech demonstrations and a pointed personal rebrand.
Other high-performers were unlikely to have been brought to the attention of someone who was not a reader of Bismarck Brief. For example, the Swedish aerospace and defense company Saab (+123% since the Brief) and the holding company of the influential Wallenberg family in Sweden (+87%). We looked at the unusual live players behind unusual companies like Palantir (+41%) and Endeavor Group (+18%). We investigated Europe’s most recent breakout financial success, the Danish pharmaceutical company Novo Nordisk (+16%)—and the century-old scientific tradition of knowledge behind it. Bismarck Brief examined how The New York Times is a dynastic family business led by a young live player who successfully reformed the newspaper company towards digital subscriptions. While other newspapers and media companies bleed money or go bankrupt, the New York Times is profitable and its valuation is up +41%.
Compared to the last time we assessed the performance of profiled companies, one year ago, there have been several interesting reversals of fortune. Two live player-led companies that were each down roughly -15% last year are now significantly up. The well-connected private equity firm Blackstone, the very first company we ever investigated, is now up +27%. The pharmaceutical company United Therapeutics, led by a transhumanist live player pursuing xenotransplantation—transplanting cheap and plentiful animal organs into ill humans in need—is now up +38%, following a complex yet ultimately successful transplant of a genetically-modified pig kidney into a human patient in April.
It is perhaps a reminder never to bet against a determined live player, who will figure out a novel way to turn fortunes around where a dead player would instead accept its fate as determined by the distributed consensus of passive investors. But the market itself is a dead player, whose expectations are routinely surprised and outmaneuvered by live players. Returns come not from aligning with the consensus of passive investors, but by aligning with live players who successfully change that consensus.
Bismarck Brief determined that the company behind CNN, Warner Brothers, and HBO was a dead player. It is down -32%. The Brief was skeptical of the future functionality of Saudi Aramco (-9%), Boeing (-12%), and the companies of Mexican mogul Carlos Slim (-19%). There were naturally plenty of positive or negative assessments that have not since correlated to stock price performance. The Brief was skeptical of the Japanese conglomerate SoftBank, which is up +75%, and there were positive assessments of Samsung (-8%) and Uber (-9%). The lowest performer by far was Estun (-52%), one of several Chinese robotics companies featured in our Brief on China’s plans for large-scale automation. Of 37 companies profiled since late 2021, four are up despite negative assessments and five are down despite positive ones. Six are down following negative assessments, and an outright majority—22—are up following positive ones.
Bismarck Brief is not financial advice. It is not intended to be, nor will it ever be. The Brief researches and analyzes the fundamentals of institutional structure, leadership, and strategy, sometimes for publicly-traded companies, but also for every other kind of key institution, whether it is a private company, government bureaucracy, nonprofit foundation, microstate, or something else. Markets do not care about fundamentals themselves. The valuations of public companies are driven rather by the capricious swings in the collective moods of retail and also institutional investors—the widespread adoption of metrics like ESG demonstrates that political considerations play a significant role as well.
The methodical and careful application of our unique theory can nevertheless help investors ground intuitions and set expectations of the future. The legendary investor George Soros famously viewed his investing strategy as popping the epistemic bubbles of false but widespread beliefs. Such a feat necessarily requires the unique knowledge, social information, and final judgment of an individual investor. But to evaluate a belief as false, one must first have a solid grounding in true fundamentals. In this way, Bismarck Brief can crucially help investors, much in the same way as it provides a strategic perspective to companies, philanthropists, and governments.
If you are not already a paid subscriber to Bismarck Brief, I warmly invite you to subscribe today and join us on this ongoing investigation into the global power landscape:
In recent weeks, Brief subscribers have received in-depth investigations of publicly-traded companies including AMD, Intel, Lockheed Martin, Raytheon, Arm, Netflix, Sony, and more. In the coming weeks, expect further investigations including China’s premier semiconductor foundry SMIC, the South Korean industrial conglomerate Hyundai, the French luxury goods empire LVMH, and more.
Sincerely,
Samo Burja
Founder and President, Bismarck Analysis
Disclaimer: Bismarck Brief does not offer financial or investment advice. This content is for informational purposes only and should not be construed as professional financial, investment, or other advice. All content is of a general nature and does not address the circumstances of any particular individual or entity. Nothing in this site constitutes professional, financial, or investment advice. Bismarck Analysis is not a fiduciary by virtue of any person’s use or access to Bismarck Brief or this content. Investing in securities carries the risk of losing funds.