Margin of Sanity Investing Podcast

Check out AK’s Substack “Unfair Advantage” here: https://substack.com/@ashwinkrishDisclaimer: Not investment advice. This publication is for education and entertainment only. Nothing here is an offer, solicitation, or recommendation to buy or sell any security. I may own (or short) securities mentioned and may change positions at any time without notice. Investing involves risk, including loss of principal. Do your own research and consider speaking with a licensed adviser who knows your situation. Get full access to Margin of Sanity at marginofsanity.substack.com/subscribe

At first glance you may be surprised that i’ve chosen to write about these two companies together, considering the seemingly fundamental differences between them. That said, rather than break down each and every figure for a quarterly report (I prefer doing that bi-annually), I thought it might be more helpful to reflect on both businesses in light of their polar opposite market reactions post-earnings. I recently had the pleasure of speaking with Siem, from The Dutch Investors, and he described his personal investment focus as: “Things that don’t change.” This statement perfectly echoes the very point of my first-ever write-up on Substack, “Thoughts on the Market,” amidst the tariff selloff. At that time, seemingly all conversation was around two subjects: How will AI change things? How will Trump/Tariffs change things? In that writeup, I listed a myriad of things I don’t know, as well as a few things I think I do know. I suggest you get a few eye rolls in preemptively as i’m about to quote myself:So I ask myself what do I know.I know America will likely need more cement and wallboard in the future and that Eagle Materials (a newer position of mine) can survive a pretty heavy downturn. I also know its price is cheaper than its been in quite a while. I also know it has cash to buy back shares at this cheaper price and will likely do so. So i’ve bought more of this position that I already owned. A company i’ve already decided I want to own for the long term at the price I paid for it or cheaper - and its definitely cheaper.I know people still want fast delivery, lots of choices, and cheap prices. I also know about 4 million businesses run on AWS and that Amazon earns high margins on that revenue. I know Amazon is 20% cheaper than it was a month ago.I know no rational person in America, Europe, or even China wants a global slowdown, trade war, or god-forbid a hot war.Apr 24, 2025This wasn’t foresight, it was just common sense. None of that has changed so far. Last quarter, Eagle posted slightly better than expected earnings and the stock rose, and Amazon’s AWS simply failed to surpass the growth rates of Azure and Google Cloud, and so the stock fell. This quarter - Q3 2025 - the opposite happened. As I write this, Amazon has just reported earnings last night, and the stock appears to be bound for a double digit day of green. Eagle has also experience double digit price moves since earnings - in the other direction.None of this really matters - and I guess thats my point. But there are a few things I want to touch on. Amazon’s Ads Business Lets forget AWS for a minute. Through decades of aggressive investment and capital allocation, Amazon has managed to build not just an e-commerce company, but a logistical powerhouse. It invested shareholder dollars in building out the necessary infrastructure to provide remarkable service to ~220 million people world-wide in the form of Amazon Prime. In doing so, Amazon’s competitive edge in e-commerce is unparalleled by any company that doesn’t have its own airplanes, trucks, vans, and warehouses. On top of this infrastructure is an online everything store with every product you could possibly imagine, all at the best price you’re going to get. “We know what Amazon is…jack-ass”Ok, fair enough. But one very interesting part of Amazon’s business - that has somehow been buried in the news of AI, Trump, and self-driving cars, is this mega-cap online retailer/computing powerhouse moving into the ads business. Can you imagine a better data-set for an advertiser than someones Amazon Prime history? Its one thing to know what someone is interested in (Meta) and its another to know what they’re interested in buying. That is a powerful distinction if you ask me. At some point i’ll write about how Amazon’s TAM is still gigantic in e-commerce, and how they’re not even profitable in many geographies…yet. But really I just want to mention the part of the Q3 release that grabbed my attention: Announced partnerships that allow advertisers to buy ad space on Netflix, Spotify, and SiriusXM Media through Amazon AdsI wonder why advertisers would want to run ads on Netflix and Spotify through Amazon…Could it be that Amazon runs the world largest online retailer? And that this means they know a LOT about consumer behavior? Or perhaps its that Amazon also knows what people listen to on Audible, or read on their Kindle, or watch on Prime Video. Or is it because Amazon happens to also be the place where people might buy your “thing” to begin with? Meaning an advertiser could learn that i’m interested in buying a grill, play me an AD on Spotify because I watched “Meat Eaters” on Netflix, and then show me an ad for THEIR grill on Amazon?! Would that not constitute a “game changing value proposition”?All I know is that the ads business is growing at +20% (in Q3 sales were $17.7B, +24% YoY) with what I can only imagine must be very high margins. The ads business seemed to come out of nowhere, but its such an unbelievably obvious move! Its not just running ads on Prime, its…well…"partnerships that allow advertisers to buy ad space on Netflix, Spotify, and SiriusXM Media through Amazon Ads”This makes me happy, and its something I felt I needed to mention. Moving on to…Eagle Materials: Still No Houses, Still No Returns If I run a risk with Eagle, its gonna be that i’m early. While their cement and aggregates business had some very nice growth this quarter, their gypsum wallboard business…did not. In the end, eventually homebuilding will have to pick up. How, why, and when is another story, and one I tried to build a framework for in my three part housing write-up. If you’re interesting in learning more about housing and affordability, that stuff is all still free to everyone on my Substack. Eagle divides their reporting into two key segments: “Heavy Materials” and “Light Materials.” Heavy materials is essentially cement and aggregates (rocks), and thanks to a recent aggregates acquisition (and cement sales volumes increasing 8%), Eagle’s heavy materials business has grow quarter over quarter. But…not enough to offset the decline (both in volume and price) in the wallboard business.Big. Freaking. Surprise. If you hadn’t noticed, people aren’t building homes right now. Its a BAD time for homebuilding, which is why i’ve been sniffing around in this area. The thing is, Eagle is total fine. They have plenty of cash coming in which they’re spending on buybacks, dividends, and improving operations. This is the beauty of a business which 1) operates in multiple geographies, 2) operates in two different markets (cement/wallboard). Its this sort of operational flexibility - together with owning their own gypsum and limestone mines - that keeps Eagle profitable in the down-cycles (which is where we are today). Do I wish housing would rebound? Sure. But in the meantime its actually easier for Eagle’s management to deploy capital efficiently. The stock is cheaper, the competition is vulnerable, and they can take some time for maintenance and upgrades in key facilities. All of this means that when the tide shifts on housing, Eagle will be in a better position than it was before the tides went out. Not only are they not “swimming naked,” but they have a bathing suit with pockets to stuff fish and shrimp into. If i’m wrong it’ll be because i’m too early. We shall see. Both of these companies operate on a fundamental principal: Some things don’t change Thinks like F = MA (the equation which defines Eagles moat), and the mere fact that everyone on Earth wants to buy “things” cheaper, faster, and easier. If you haven’t taken a listen yet, check out the first ever Margin of Sanity interview podcast! Where I talk to Ozeco about something else that doesn’t change (electricity)Stay tuned for another podcast with the incredible AK where we’ll talk about Kaspi, and keep an eye out for a new Margin of Sanity deep-dive on Oil. I’ll also likely do an update on coal as earnings start to roll in for those guys.Much Love,MoSDisclaimer: Not investment advice. This publication is for education and entertainment only. Nothing here is an offer, solicitation, or recommendation to buy or sell any security. I may own (or short) securities mentioned and may change positions at any time without notice. Investing involves risk, including loss of principal. Do your own research and consider speaking with a licensed adviser who knows your situation. Get full access to Margin of Sanity at marginofsanity.substack.com/subscribe

Check Out Ozeco’s Substack: “Crack the Market”Read Ozeco’s “Electricity is the New Oil” write-up Disclaimer: Not investment advice. This publication is for education and entertainment only. Nothing here is an offer, solicitation, or recommendation to buy or sell any security. I may own (or short) securities mentioned and may change positions at any time without notice. Investing involves risk, including loss of principal. Do your own research and consider speaking with a licensed adviser who knows your situation. Get full access to Margin of Sanity at marginofsanity.substack.com/subscribe

Disclaimer: Not investment advice. This publication is for education and entertainment only. Nothing here is an offer, solicitation, or recommendation to buy or sell any security. I may own (or short) securities mentioned and may change positions at any time without notice. Investing involves risk, including loss of principal. Do your own research and consider speaking with a licensed adviser who knows your situation. Get full access to Margin of Sanity at marginofsanity.substack.com/subscribe

Disclaimer: Not investment advice. This publication is for education and entertainment only. Nothing here is an offer, solicitation, or recommendation to buy or sell any security. I may own (or short) securities mentioned and may change positions at any time without notice. Investing involves risk, including loss of principal. Do your own research and consider speaking with a licensed adviser who knows your situation Get full access to Margin of Sanity at marginofsanity.substack.com/subscribe

Disclaimer: Not investment advice. This publication is for education and entertainment only. Nothing here is an offer, solicitation, or recommendation to buy or sell any security. I may own (or short) securities mentioned and may change positions at any time without notice. Investing involves risk, including loss of principal. Do your own research and consider speaking with a licensed adviser who knows your situation. Get full access to Margin of Sanity at marginofsanity.substack.com/subscribe

Check out the full write-up for free on the Margin of Sanity SubstackDisclaimer: Not investment advice. This publication is for education and entertainment only. Nothing here is an offer, solicitation, or recommendation to buy or sell any security. I may own (or short) securities mentioned and may change positions at any time without notice. Investing involves risk, including loss of principal. Do your own research and consider speaking with a licensed adviser who knows your situation. Get full access to Margin of Sanity at marginofsanity.substack.com/subscribe

Disclaimer: Not investment advice. This publication is for education and entertainment only. Nothing here is an offer, solicitation, or recommendation to buy or sell any security. I may own (or short) securities mentioned and may change positions at any time without notice. Investing involves risk, including loss of principal. Do your own research and consider speaking with a licensed adviser who knows your situation. Get full access to Margin of Sanity at marginofsanity.substack.com/subscribe

Disclaimer: Not investment advice. This publication is for education and entertainment only. Nothing here is an offer, solicitation, or recommendation to buy or sell any security. I may own (or short) securities mentioned and may change positions at any time without notice. Investing involves risk, including loss of principal. Do your own research and consider speaking with a licensed adviser who knows your situation. Get full access to Margin of Sanity at marginofsanity.substack.com/subscribe

Disclaimer: Not investment advice. This publication is for education and entertainment only. Nothing here is an offer, solicitation, or recommendation to buy or sell any security. I may own (or short) securities mentioned and may change positions at any time without notice. Investing involves risk, including loss of principal. Do your own research and consider speaking with a licensed adviser who knows your situation. Get full access to Margin of Sanity at marginofsanity.substack.com/subscribe

Do you remember 2021? I do - I remember it well. Stocks had rebounded big time, and those of us who were buying during the Covid sell-off were feeling pretty damn good. I was only 2 years into my investing journey then, and my chest was rather puffed. I felt confident. I had taken risks and they had paid off.But something else was going on too… Get full access to Margin of Sanity at marginofsanity.substack.com/subscribe

Disclaimer: Not investment advice. This publication is for education and entertainment only. Nothing here is an offer, solicitation, or recommendation to buy or sell any security. I may own (or short) securities mentioned and may change positions at any time without notice. Investing involves risk, including loss of principal. Do your own research and consider speaking with a licensed adviser who knows your situation. Get full access to Margin of Sanity at marginofsanity.substack.com/subscribe

Disclaimer: Not investment advice. This publication is for education and entertainment only. Nothing here is an offer, solicitation, or recommendation to buy or sell any security. I may own (or short) securities mentioned and may change positions at any time without notice. Investing involves risk, including loss of principal. Do your own research and consider speaking with a licensed adviser who knows your situation. Get full access to Margin of Sanity at marginofsanity.substack.com/subscribe

Disclaimer: Not investment advice. This publication is for education and entertainment only. Nothing here is an offer, solicitation, or recommendation to buy or sell any security. I may own (or short) securities mentioned and may change positions at any time without notice. Investing involves risk, including loss of principal. Do your own research and consider speaking with a licensed adviser who knows your situation. Get full access to Margin of Sanity at marginofsanity.substack.com/subscribe

The story of the French financial catastrophe known as "The Mississippi Bubble." Get full access to Margin of Sanity at marginofsanity.substack.com/subscribe

Disclaimer: Not investment advice. This publication is for education and entertainment only. Nothing here is an offer, solicitation, or recommendation to buy or sell any security. I may own (or short) securities mentioned and may change positions at any time without notice. Investing involves risk, including loss of principal. Do your own research and consider speaking with a licensed adviser who knows your situation. Get full access to Margin of Sanity at marginofsanity.substack.com/subscribe

Check out the substack here: https://substack.com/@marginofsanity Get full access to Margin of Sanity at marginofsanity.substack.com/subscribe

Check out the substack here: https://substack.com/@marginofsanity Get full access to Margin of Sanity at marginofsanity.substack.com/subscribe

Check out the full write up here: https://substack.com/@marginofsanity Get full access to Margin of Sanity at marginofsanity.substack.com/subscribe

Check out the Margin of Sanity Substack Here: https://substack.com/@marginofsanity Get full access to Margin of Sanity at marginofsanity.substack.com/subscribe