Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421]

Invest Like the Best with Patrick O'Shaughnessy

Colossus

Investing, Business, Technology

4.8 • 2.4K Ratings

🗓️ 29 April 2025

⏱️ 122 minutes

🔗️ Recording | iTunes | RSS

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Summary

My guest today is Cliff Sosin. Cliff is the founder of CAS Investment Partners, a fund he started with $5 million in 2012 and has grown to $1.7 billion as of the last reported numbers at the end of 2024. At the time, CAS had only four positions. This conversation is different to our typical episodes. We start by talking about Cliff's investing philosophy but the bulk of this long discussion is a case study into his remarkable investment in Carvana. Cliff is one of the biggest investors in the business, which had a market cap over $60 billion in 2021, then fell 99%, survived, and now has a market cap approaching $50 billion again. While I hosted Carvana's CEO, Ernie Garcia, last year to get the inside perspective on managing through such turbulence, today we hear the investor's side of this extraordinary story. It is a singular episode and there are so many lessons in this rare opportunity to hear a major investor describe his decision-making process at every stage of the journey. Please enjoy my great conversation with Cliff Sosin. For the full show notes, transcript, and links to mentioned content, check out the episode page here. ----- This episode is brought to you by Ramp. Ramp’s mission is to help companies manage their spend in a way that reduces expenses and frees up time for teams to work on more valuable projects. Go to Ramp.com/invest to sign up for free and get a $250 welcome bonus. – This episode is brought to you by Ridgeline. Ridgeline has built a complete, real-time, modern operating system for investment managers. It handles trading, portfolio management, compliance, customer reporting, and much more through an all-in-one real-time cloud platform. Head to ridgelineapps.com to learn more about the platform. – This episode is brought to you by AlphaSense. AlphaSense has completely transformed the research process with cutting-edge AI technology and a vast collection of top-tier, reliable business content. Invest Like the Best listeners can get a free trial now at Alpha-Sense.com/Invest and experience firsthand how AlphaSense and Tegus help you make smarter decisions faster. ----- Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com). Show Notes: (00:00:00) Welcome to Invest Like the Best (00:05:32) Early Career and Discovering Investing (00:06:49) Starting the Firm and Initial Challenges (00:08:41) Investment Philosophy and Market Realities (00:11:07) Building the Firm and Investor Relations (00:12:23) Defining a Good Business (00:17:31) Contained vs. Uncontained Businesses (00:20:30) Mental Models and Market Insights (00:35:13) The Role of ESG in Investing (00:39:26) The Carvana Investment Story (00:46:43) Carvana's Real Estate and Logistics Network (00:49:12) Reconditioning and Selling Cars (00:50:16) Carvana's Financing and Customer Service (00:51:43) Economies of Scale and Trust (00:54:40) Challenges and Management Insights (01:04:07) Operational Issues and Market Challenges (01:23:56) Questioning Carvana's Sales Strategy (01:24:17) The Role of Word of Mouth in Carvana's Growth (01:25:28) Identifying Early Adopters (01:26:00) The Impact of Market Conditions on Carvana (01:27:10) Carvana's Operational Challenges (01:28:10) Cutting Costs and Organizational Efficiency (01:32:19) The Apollo Deal and Debt Restructuring (01:39:21) The Psychological Toll of Investment (01:50:16) Future Investment Strategies and AI (01:54:48)The US Market and Investment Opportunities (01:59:51) The Kindest Thing Anyone Has Ever Done For Cliff

Transcript

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0:00.0	Something I speak about frequently on Invest Like the Best is the idea of life's work.
0:04.5	A more fun way to think about it is that I'm looking for maniacs on a mission.
0:08.5	This is the basis for our investment firm, Positive Sum, and it's the reason why I'm so enthusiastic about our presenting sponsor, Ramp.
0:15.0	Not only are the founders, Karim and Eric, life's work-level founders, certainly maniacs on a mission.
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0:25.5	by streamlining financial operations, saving everyone their most precious resource time.
0:30.9	Ramp has built a command and control system for corporate cards and expense management.
0:35.1	You can issue cards, manage approvals, make vendor payments of all kinds, and even automate
0:39.4	closing your books all in one place.
0:41.7	Speaking from my own experience using Ramp for my business, the product is wildly intuitive,
0:46.4	simplistic, and makes life so much easier that you'll feel bad for any company who hasn't
0:50.4	yet made the switch.
0:52.5	The Ramp team is relentless, and the product continues to evolve to save you time
0:56.0	that you would never have dreamed of getting back.
0:58.2	To me, there is nothing more interesting
1:00.0	than technologies that reduce friction for other entrepreneurs
1:03.7	to be able to build the thing that they want to.
1:06.2	So much attention has gone to cloud computing,
1:08.8	APIs, and other ways of making life easy for founders,
1:12.5	what RAMP has done and is doing is build yet another set of tools in this category.
1:18.0	To get started, go to ramp.com. Cards issued by Celtic Bank and Sutton Bank, member FDIC,
1:23.9	terms and conditions apply.
	...

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