Episode
#310: Modern Value Investing w/ Jose Mayora
- Podcast
- Stock Club
- Published
- May 7, 2026
- Duration seconds
- 2719
- Processing state
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Summary
The typical definition of Value Investing: Buying an asset for less than it’s truly worth. But according to this week’s guest Jose Najarro, the concept is widely misunderstood. Too often, value investing is associated with older, slower companies, think utilities, and traditional metrics like low price-to-earnings or price-to-book ratios. But those alone don’t define value. Every valuation comes with a set of implicit assumptions, and the real skill lies in unpacking them and deciding whether they’re realistic. In fact, some of Jose’s best-performing investments would never have been labeled “value plays” by conventional standards. Instead, he describes his philosophy as a modern take on value investing. His book, Wall Street’s Blind Spots , explores this idea in depth. Most importantly: you can’t judge a business purely by its cash flows – you have to look at what it does with them. Companies that reinvest cash poorly, such as buying back stock at inflated prices, can destroy value. On the other hand, businesses that consistently generate high returns on invested capital deserve a premium. Jose points to companies that can achieve around 20% returns on invested capital (ROIC) as the gold standard. Apple is a classic example: the success of the iPod funded the development of the iPhone, the iPhone funded the launch of wearables, and enormous long-term returns were achieved. Amazon is another, continually reinvesting into new ventures and compounding value over time. This framework raises important questions in today’s AI race. For instance, Google is expected to spend around $200 billion in capital expenditures this year. To justify that, it would need to generate roughly $220 billion in profit to achieve a 20% return – an outcome Jose views as far from certain. He dra…