Key Concepts
- Forgotten 40: A portfolio of 40 undervalued stocks with identifiable catalysts for growth.
- Catalysts: Specific events or factors expected to drive stock price appreciation within 12 months.
- Sum of the Parts Valuation: Assessing a company’s value by totaling the individual worth of its business units.
- Activist Investment: An investor or group purchasing shares with the intent to influence the company’s management or strategy.
- Section 162 Tax Law: A US tax law limiting deductible compensation for highly paid employees of publicly traded companies.
- Share Repurchase (Buyback): A company buying its own shares from the market, reducing outstanding shares and potentially increasing stock price.
- Autonomous Vehicles (AVs): Self-driving cars.
Stock Picker’s Market & The Forgotten 40 Portfolio
The discussion centers around a “stock picker’s market” and Jonathan Voyeur’s “Forgotten 40” portfolio – a selection of 40 undervalued stocks poised for outperformance. Voyeur emphasizes that his selection process prioritizes identifying catalysts – specific events expected to drive stock appreciation within the next 12 months – rather than simply choosing the cheapest stocks. He states, “The biggest thing, catalysts. What’s going to make that stock ascend in value. It’s not our cheapest stocks, but it’s the stocks in you are universe that have identifiable catalysts.”
Individual Stock Picks & Rationales
The interview details four specific stock picks from the Forgotten 40 portfolio, outlining the rationale behind each:
1. Uber: Despite recent declines in stock price due to concerns surrounding the viability of autonomous vehicles (AVs), Voyeur believes Uber is undervalued. He argues that the market overreacted to setbacks in AV development, as demonstrated by Waymo temporarily suspending operations in San Francisco. He anticipates Uber will benefit when AV technology matures, functioning as a source of cheap labor. Furthermore, Uber’s $20 billion share repurchase program is seen as a positive factor. He notes the recent dip in price, stating, “It’s gotten hit pretty hard because of fears over robotaxis, autonomous if vehicles…Over the last month or two.”
2. Cooper Companies: This company, the second-largest contact lens manufacturer globally, also has a women’s health division. Voyeur highlights an activist investment pushing for a split of these two divisions. He believes the market undervalues Cooper Companies, currently trading at 15 times earnings, with potential to reach 18 times earnings and a value exceeding $82 per share.
3. Markel Group: Described as a “baby Berkshire,” Markel Group is trading at a discount to its sum of the parts valuation. The company is currently undergoing a strategic review, and Voyeur suggests potential actions include a significant stock buyback.
4. Atlanta Braves (Liberty Braves): This is the only publicly-traded Major League Baseball (MLB) team, offering investors access to a unique asset. Voyeur believes the team could be sold, driven by changes in Section 162 of the tax law. This law prevents publicly traded companies from deducting compensation for their five highest-paid employees, a significant issue for baseball teams with highly compensated players (e.g., $150 million for the top five). This creates a strong incentive for the team to go private. He states, “Section 162 of the tack law does not allow companies to deduct their five highest paid employees if you’re a publicly traded company…they have a real sniff to go private.”
Previous Recommendation & Current Status
Voyeur’s previous recommendation, UNF, has seen significant gains due to a takeover offer. When asked if it’s still a good buy, he affirms its continued value, noting it was trading at $170 on Friday and is now at $200, stating, “It’s still selling…it’s cheap.”
Logical Connections & Framework
The interview follows a logical progression: establishing the investment philosophy (Forgotten 40, catalyst-driven), then presenting specific stock picks with detailed rationales. The discussion seamlessly connects market events (AV setbacks, tax law changes) to investment opportunities. The framework emphasizes identifying undervalued companies with clear pathways to increased value.
Data & Statistics
- Uber Share Repurchase: $20 billion
- Cooper Companies Trading Multiple: Currently 15x earnings, potential to reach 18x.
- Cooper Companies Target Price: Exceeds $82 per share.
- Atlanta Braves Top 5 Employee Compensation: $150 million.
- UNF Price Increase: From $170 (Friday) to $200 (current).
Conclusion
Jonathan Voyeur’s investment strategy focuses on identifying undervalued companies – the “Forgotten 40” – with identifiable catalysts for growth. His picks span diverse sectors, from technology (Uber) to healthcare (Cooper Companies) and entertainment (Atlanta Braves), demonstrating a broad approach to value investing. The emphasis on catalysts, coupled with a keen awareness of market dynamics and regulatory changes, forms the core of his investment philosophy. The success of his previous recommendation, UNF, reinforces the potential of his approach.
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