Best Ideas Magazine - 2021 Edition - MOI Global

BEST IDEAS MAGAZINE 2021 EDITION / PUBLISHED BY MOI GLOBAL

THE BEST IDEAS FULLY ONLINE CONFERENCE BRINGS TOGETHER GREAT MINDS FROM THE MOI GLOBAL NETWORK OF INTELLIGENT INVESTORS, WITH A FOCUS ON TIMELY AND ACTIONABLE INVESTMENT IDEAS.

BEST IDEAS MAGAZINE

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CONTENTS EDITORIAL / John Mihaljevic / page 4 VALUE INVESTING AND THE BUSINESS OF INVESTING / with DAVID BARR / page 7 ROBOTTI & COMPANY’S APPROACH TO INVESTING / with BOB ROBOTTI / page 14 WHY WE SEEK THE COMPANY OF LONG-TERM COMPOUNDERS / with SOUMIL ZAVERI / page 19 INTELLIGENT INVESTING IN A CHANGING WORLD / with AMIT WADHWANEY / page 24 WHAT DOES IT MEAN TO BE A GREAT INVESTOR? / with RUDI VAN NIEKERK / page 32 FOCUS ON GOOD DECADES, NOT GOOD DAYS / with PETER MANTAS / page 34 INSTRUCTOR PROFILES / page 44

JOHN MIHALJEVIC, EDITOR IN CHIEF; TYLER HOWELL, EDITORIAL / DESIGN DIRECTOR; DESIGN: MARICAR ABAYAN PHOTOS: VARIOUS SOURCES TEXT: MOI GLOBAL, OTHER SOURCES

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EDITORIAL

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elcome to Best Ideas 2021!

Through invitation-only events and member publications, MOI Global fosters a community of intelligent investors united by a passion for lifelong learning.

I am pleased to share with you the progress we have made building MOI Global into a unique membership community.

The Manual of Ideas started out more than a decade ago focused on content.

As we went out to gather and generate uniquely differentiated content for value-oriented investors, we came to appreciate the tight-knit value investing community that had been developing for many years thanks to a strong nucleus formed by the Berkshire Hathaway annual meeting.

We realized this was not only a community of exceptionally gifted and successful investors, but that the vast majority of them were also willing to share with and learn from their peers.

We were humbled to have an opportu-

nity to bring the wisdom of investors like Jean-Marie Eveillard, Charles de Vaulx, Tom Gayner, Howard Marks, James Montier, Tom Russo, Mohnish Pabrai, Guy Spier, Murray Stahl, Will Thorndike, Arnold van den Berg, Ed Wachenheim, and Don Yacktman to others in the community. We also saw an opportunity to leverage the internet to help broaden the appeal of value investing beyond its traditional U.S. base.

We call this membership community MOI Global, with The Manual of Ideas constituting one component of the value we bring to members. Other benefits include content shared on this website; curated idea presentations shared via online events such as the Best Ideas conference, Asian Investing Summit, Wide-Moat Investing Summit, European Investing Summit, and Meet-the-Author Summer Forum; as well as offline experiences such as Latticework, Ideaweek, The Zurich Project, The Frankfurt Conversation, Best Ideas Omaha, and member-run

JOHN MIHALJEVIC, Editor in Chief

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local chapter meetings in many cities globally.

All of the above benefits are now available to members of MOI Global (at no incremental membership fee). In the past, our online events (formerly ValueConferences) generated revenue from ticket sales. Now they are not only complimentary to MOI Global members, but they are exclusive to members.

We look forward to featuring more than seventy expert instructors at Best Ideas 2021. These experienced investors will present in-depth research into their best investment ideas. We hope the conference will give you much "food for thought" and potential opportunities on which to follow up.

Thank you for allowing us to play a constructive role in your journey as an investor. Thank you also for being a part of the MOI Global journey as we pour passion and resources into building a special kind of community.

AN MOI GLOBAL PUBLICATION / 2021 EDIT ION

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DAVID BARR IN AN EPISODE OF THE ZURICH PROJEC T PODCAST, PRESENTED BY MOI GLOBAL, DAVID BARR, PRESIDENT AND CEO OF PENDERFUND CAPITAL MANAGEMENT, TALKED ABOUT HIS VALUE INVESTING PHILOSOPHY AND THE BUSINESS OF MANAGING AN INVESTMENT FIRM. THIS CONVERSATION WAS RECORDED PRIOR TO DAVID JOINING THE MOI GLOBAL COMMUNITY AT THE ZURICH PROJECT 2019. DAVID IS A FEATURED INSTRUCTOR AT BEST IDEAS 2021.

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VALUE INVESTING AND THE BUSINESS OF INVESTING

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OI Global: It’s a real pleasure to welcome David Barr, president and CEO of Vancouver, Canada-based PenderFund Capital Management. The members of our community have gotten to know Dave quite well through his participation in our online conferences and his generous sharing of insights with MOI Global.Before we delve into your approach to value investing,

you could tell us a bit about your own path to becoming a value investor and how you’re pursuing it these days at Pender?

David Barr: I took an interesting path to becoming a value investor. I started off wanting to be a doctor and ended up reading the financial section of our national newspaper during my biology lectures. Eventually, it led me to pursue a degree in finance in Toronto.

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MOI: Tell us a bit more about finding the right people for your organization and how you look for the right people at the companies you invest in.

Barr: It’s quite challenging at our organization. We meet with a lot of people and always try to identify those who have a passion for investing. What books are they reading in their spare time, for example? I go home at night and read about this stuff all the time because I love what I do; I’m passionate about investing. The business side of it is a byproduct.

The challenge we face is that so many young people are attracted to this industry by the promise of making a lot of money. We have to weed out those people, which is one of the hardest things to do. On the investing side, we wish there was a formula to make it easy, but it’s tricky because there is never a single-variable problem.

What we look for most is whether the management team, the directors, and even the other shareholders are incented to do the right thing for the business in the long term.

That can be tricky to determine if you don’t know the people well. One of the things we like to do is meet with management teams several times over several years and build out our private scorecard to see if they are management teams that under-promise and over-deliver – those are the people we want to invest in. Management teams that tell you they’re going to change the world usually come up short and don’t necessarily do well over the long term.

MOI: You have also done quite well engaging with smaller companies, which perhaps ties to your previous experience in venture capital. Tell us a bit about how you’ve done that and what your approach is there.

Barr: The venture process is still highly influential in how we invest. You do deep due diligence, get to understand the busi-

In my opening week of school, we had a bunch of speakers, among them Tony Arrell, who runs a firm called Burgundy. He gave a speech about this gentleman called Warren Buffett. Up until that point, I hadn’t heard of Buffett, but I ran to the library the next morning, and the first book I pulled out was The Warren Buffett Way. After that, I tried to devour everything I could about him. It was interesting because I was pursuing a degree in finance and learning all the theoretical stuff, but far more important for me was everything I learned on my own time reading about Buffett and value investing. The fact that I was introduced to Buffett right before I got into the hardcore investment courses saved me some hardship in my career.

I started in venture capital in 2000, which was very influential for me in two ways.

First, we were investing in fairly early stage companies and, in some cases, startups. With startups, there is no product and no customers; the one thing you do have is people.

Looking at the companies we invest in, we’ve seen the transition from an industrial economy and how the brand-based companies build great moats and deliver wonderful free cash flow over the years. I think we now have more of a knowledge-based economy, so in order to understand these companies, you need to understand people. We very much look at these knowledge-based companies and the people involved, but it’s also quite important for us to have the right people on board. Starting in technology and venture capital in 2000 really drove a focus on people.

Second, it drove home that you should find companies running towards profitability and having management teams that make wise decisions. If you want to survive bad markets, you need to focus on well-run, well-positioned, quality businesses that drive value.

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ness and the market it’s in, and learn about the people. That’s the first part of a venture capital approach. The second part is going out and building companies. With some of these smaller companies, we like to engage with management teams on a very friendly basis and try to help build value. In public companies, where people’s investment time horizons are shrinking every single day, one of the biggest benefits we can bring is being a large, stable, supportive shareholder. I frequently have meetings with management teams that are challenged because they need to make a decision which will not look good on the next quarter, but looking three or five years out, it is a no-brainer decision. Because there’s such volatility in the market and what I call angry activists out there, management teams are often afraid to make those decisions if they don’t own enough of the company. Having a large, supportive shareholder allows these companies to do the right thing for the long term.

Also, if there are people we think can add value to the company or if we can make any introductions, we have a pretty extensive network across North America. When we own a large part of the company, why not bring that network to bear and try to improve the value of the business?

MOI: How do you go about doing that?

Obviously, your time is limited, so to what extent does the team get involved there?

How does it work on a day-to-day basis?

Barr: The majority of my time would be spent either on new idea generation or meeting with management teams. Those are the two areas where I can add the most value for our unitholders longer term. In the smaller companies, I’m quite happy to engage with the management teams. We don’t sit down for 10-hour strategy sessions, but they come in, and I try to be honest and ask them if they’re having any issues and what can we

do to help them. I think we’ve been very successful helping many of these companies, and we have a good reputation amongst CEOs in the investment community. It’s easier today than it was 10 years ago. Management teams are quite open and happy to engage with us.

It’s also a bit of a test because if the management team tells us to go away and leave it alone, that’s a little black mark we put on the file and always keep in mind that these people may not be open to doing the best thing for shareholders.

MOI: How about the types of businesses you like to engage with? You apparently gravitate toward companies of high quality and with the right people in place. What industry sectors has that led you to?

Barr: We spend most of our time in our more active situations – technology, primarily software, a little more on the hardware side, and also healthcare but excluding drug development. We understand those businesses extremely well and have great relationships throughout these industries. It’s where we have knowledgeable insight and relationships that we can help the companies out. Technology and healthcare are knowledge-based businesses.

It’s all about the people in those companies, so we try to analyze the culture because it is a seriously underrated source of competitive advantage. People are becoming more aware of it, but it’s still early innings in terms of our general understanding of how powerful it can be.

MOI: Culture and people are subjective things. You are a value investor, so are there some financial or valuation metrics you do require in order to get interested in a company?

Barr: It’s indeed completely subjective.

One thing you can do is check websites that have independent reviews from previous or current employees of the culture and how

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Barr: We do a bit on anything in our circle of competence which comes up in the normal course of our due diligence. An example would be Baidu. We’d been digging into AI for several years, looking for a specific opportunity. A short-term blip in the operations of Baidu gave us an opportunity to enter it. We have a couple of analysts who follow the Chinese market closely. That would be how we would look outside North America.

We’ve done a couple of things in Europe as well, but for us, there are a lot of companies we can invest in North America. Our investment team has only nine members, so at present, we don’t spend a lot of time looking elsewhere. But when something comes up, our primary objective is to make money for the unitholders in our fund.

MOI: Tell us a bit about your process for identifying great management teams or cultures. Do you keep watch lists? Do you track people through their careers? How do you build that knowledge base within your firm?

Barr: Our due diligence files go back to 2000. Every time we have our management meetings, we take notes, mostly to assess the character of the management team. You don’t generally gain a lot of unique insights during a management meeting. It’s understanding how they view the world and how they’re leading the business. We’ve accumulated a lot of knowledge on various companies and the leadership teams over the years, so we now have people on our watch lists whose involvement with a company takes it to the top of our due diligence list. If there are people with enough little black ticks, we will exclude them from our process right out of the gate.

MOI: In a first management meeting, what questions do you want to make sure you have a chance to ask?

things are going. You can also dig in a little when you’re calling into the company, but you have to take everything with a grain of salt because there are usually people paid to make positive recommendations, and the negative ones come from angry people who have been fired. It is quite challenging.

With culture, we definitely see it set from the top, so it’s understanding what the CEO and the management team are trying to drive through and if they’re being successful.

Generally, successful cultures drive successful results. We have a wonderful example in Seattle now with Microsoft, where a new CEO comes in and implements a new culture. We think it’s totally on point with where Microsoft is in terms of its development – it’s got a wonderful position in the Office market, but it really had to revamp and focus on product development and meeting customers’ needs.

That required a culture shift, and the new CEO set the tone right away. I don’t spend a lot of time looking at companies of that size, but when I saw it happen, I got really excited. Then you start talking to people at Microsoft, and it is absolutely coming through in the rank and file as well. I find this an interesting example of how a culture change positively impacted the business moving forward.

MOI: What would prevent you from investing in a company where you felt the culture and the leadership were right?

Barr: If the leadership and culture are there, that’s a wonderful thing, but at the end of the day, you need a business. You can’t have a wonderful management team building a great culture if the business is terrible.

But when you have a really good or great business, and then you get the people and the culture right, you can experience some wonderful things.

MOI: To what extent are you investing outside of Canada at this point?

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Barr: If you have a prescriptive checklist going into a meeting, you will probably miss the right questions to ask. It’s an organic process where you can sometimes detect a little arrogance. You might want to get a bit more aggressive or even condescending in your questions to see how the management team responds to that. If someone’s got a big ego and you start talking down to them, they’re going to respond, and that will give you some insight into what type of person they are and what’s driving them.

When you’re dealing with smaller companies, you don’t have the Harvard-trained professional CEO, so they’re not as polished.

Many times, they’ll have a harder time communicating what’s been successful in their business operations or what their strategy is going forward. In situations like that, we try to ask more leading questions to draw out the answer and see if there is clarity of thinking inconsistent with the way they’re communicating. We found some of our best opportunities when we had a three-hour meeting with the CEO because it takes them three hours to get across 20 minutes of information. A lot of other investors will just tune out in the first five minutes and shut the meeting down. But if you see a business with solid fundamentals and try to understand if the leaders have what it takes to take it to the next level, it’s probably worth investing the time and trying to draw it out.

That’s been a great source of alpha for us over the years.

MOI: There’s sometimes a dichotomy between a CEO being great at running the business and being great at capital allocation.

How do you draw out those skills? If you have to choose one versus the other, what would you rather have?

Barr: That’s a great question. We like both, but it’s incredibly rare. Often, we’re focused more, me particularly, on the small-cap

side, on businesses in the early stages of a large market. The capital allocation should be reinvesting in the business. The thing we worry about more on the capital allocation side is silly M&A because the majority of it is totally silly. We focus more on who the good business operators are because if we have a large piece of the company and a dialogue with management, generally, if they’re considering M&A, we could sign an NDA, go on a blackout and influence that decision.

We’ve been proactive doing that quite often in the past.

Assessing good capital allocators is really challenging. Everybody wishes they found the great ones early on and got to experience the wonderful compounding, but you do need to see the track record and the discipline.

One of the things I like is when management is pursuing an M&A strategy, has got a bunch of cash and can do deals, but it doesn’t. The worst capital allocators are the people who get too excited about doing deals for the sake of it. The best ones are those who are really patient, understand the economics of the transaction, and wait for the right price. If we see a CEO sitting on cash for a while, waiting for the right opportunity and turning down growth at all costs, roll-up strategies, that’s a highly positive signal for us. On the negative side, when you’re looking at roll-up strategies, parsing through the press releases and what people are talking about, if they’re talking about how the business is growing in terms of revenue and employees but not about the return on investment or what incremental margins are going to be, they’re probably focused on the wrong thing, and it’s not going to end well.

MOI: Your upcoming talk at the Zurich Project is titled “Balancing Investing in Businesses versus the Business of Investing.”

What do you mean by that?

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Barr: It’s the push and pull of the sales department versus the investment team. I’m sure every investment organization across the planet has this because at the end of the day, if you don’t have any assets, you don’t have a business. How do you balance where you should be spending your time and energy? As you start to grow, where should your next hire be? Should it be an analyst to deepen your investment process or should it be on the sales and marketing side to increase your AUM so that maybe you can hire two analysts down the road?

It’s a great discussion point because there’s no right answer to it. Everybody likes the world to be black and white, but most things are gray. It’s about finding the happy medium that works for the people at the organization, where their strengths are and how they see the business evolving. An asset management business can be successful if it focuses purely on investing. If it is focused exclusively or almost entirely on sales and marketing or raising more assets, there might be some people who make money over the long term, but it certainly isn’t going to be the unit holders of the funds.

MOI: Dave, thanks so much for taking the time to share your insights today. We always appreciate it.

David Barr at The Zurich Project 2019

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REITERATING ROBOTTI & COMPANY’S VALUE-BASED APPROACH TO INVESTING WITH BOB ROBOTTI, ROBOTTI & COMPANY Bob is a featured instructor at Best Ideas 2021

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looking at individual securities, analyzing those companies, making determinations as to what a conservative fair value of that business is, and buying those businesses for less than what that value indicated.

Why is that a potential opportunity? Ben also spent a lot of time talking about investors, the rationality of investors, the emotion of investors, and how that affects security prices. So, another fundamental part of value investing is the disbelief in the idea that there is an efficient market, that every security properly evaluates the future cashflows of that company discounted down to today.

An important behavioral bias that Graham often alluded to was the idea of recency bias. What is today and what was yesterday is projected to be what will be tomorrow.

Frequently yesterday and today are not the right indicators for the future opportunity.

So, it is looking at businesses, understanding the businesses, and making conservative estimates of future values: that is a key determinant. It is individual security analysis and the belief that securities can frequently be mispriced.

The longer a security is mispriced, potentially, the more it is underpriced. That gives

his article includes modified excerpts from the 2020 Annual General Meeting of Robotti & Company, based in New York.

BOB ROBOTTI: The format is different this year, but our message is exactly the same. There has been a consistent foundation to our investment approach over the 35 years we have been around, and that is we are unabashed value investors. Covid has provided a generational entry point which includes the acceleration of trends we have been noting for years along with consolidation activity among core themes in which we are active investors.

What is value investing? Security Analysis, the seminal work by Ben Graham, introduced that investment approach. And the title is a key indicator of what it is: it is individual stock research and bottom-up investing is a critical element of this investment approach. Now the way it is practiced today is different than when Graham first wrote his text. Back then, he wrote it in the middle of The Great Depression. So, he bought stocks that had low price to book, low PE rations, high dividend yields, and that was the approach. But the intention all along was

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you the opportunity for both returns, and, of course, it mitigates risk, the margin of safety that Graham also spoke about. So, those concepts and precepts continue throughout our investment approach today.

THEO VAN DER MEER, SR INVESTMENT ASSOCIATE: I’ll start off with a question that is on a lot of people’s minds today, which is when do you think that we’ll get back to some semblance of normalcy?

BOB ROBOTTI: I guess the important thing, in my mind, is to emphasize the last part of your question: “back to some semblance of normalcy.” The key, in my mind, is that the current situation with the pandemic is not the “new norm.” Frequently what we’re talking about are behavioral biases. People know the current situation and project it into the future. We think this is a transitory issue. We do think– we don’t know if it’s six months or a year or two, whether it is one of these vaccines or some other solution. But this is not the new norm. So, the importance in thinking about the pandemic or political unrest and social unrest, all of those things, we’re looking to invest in businesses and make estimates as to the future cash flows of that business, the present value of those cash flows, and how much will accrue to equity owners. The important question is,

okay, so what’s the impact on the business?

How does it change those future cash flows?

How does it potentially reduce some of those cash flows in the short term? How long does that last? How big is that impact? What things are unleashed? What trends that were potentially underway are actually accelerated in the process?

So the important question is not when do we get back to normal. What is important is estimating the impact of the current situation. How much of it is permanent? How much of it is not? And how that affects the valuation of the businesses we’re invested in. I’d also highlight that, when the market gets that estimate wrong it creates a really opportune situation for stock pickers like ourselves.

THEO: Bob, do you want to talk about some other ways in which a long-term time horizon has manifested itself in the portfolio?

BOB ROBOTTI: Once again, it’s the market looking from the wrong time horizon thinking that today is tomorrow. Our investments in home building are an excellent case study. In 2008, 2009, we were looking at the home building business and thinking, this is an interesting industry. The industry has imploded, worst ever post-World War II,

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with the lowest amount of new homes being constructed. There was a significant amount of oversupply, too many homes were built, and with the financing on that, foreclosures were rising. With an oversupply that was significant, new home building fell to very low levels, and there was no appreciation, no understanding and no timeline for when that would be corrected.

We started to look for businesses that were well-positioned, differentiated in terms of their business, had financial situations that ensured their ability to withstand the situation, to survive the downturn, and importantly, to thrive in the recovery because clearly those kinds of situations create great dislocations, and for certain well-managed businesses that are well financed, the oppor-

are improving their competitive position and improving their earnings power even before the recovery comes. And the extension of a downturn provides even a greater runway of opportunity for a recovery. So, that’s, we think, a classic example of something that you’ve already seen the manifestation of in homebuilding.

Moreover, we think we’re still extremely well-positioned today in the homebuilding space interestingly because we still think there was a 10, 11-year period of significant underbuilding. That means you have underbuilt 3 to 5 million homes over that extended period of time. And we’ve gone from 67% homeownership, an all-time record high, down to 62%, which is a long-time low. And we think there’s a lot of underlying trends that already had started to change, that already increased the demand for single-family homes, the interest for people to move out of urban areas, into suburban areas. We think COVID clearly has been an accelerant to that change and, therefore, the expansion of the earnings power and the timeline and the realization for these investments.

THEO: Do you want to give a specific example?

BOB ROBOTTI: The best example of what we’re talking about are our investments in the distributers to the homebuilders: first, Builders FirstSource in 2009, then BMC in 2010 post its bankruptcy we accumulated equity from a number of the banks who were the lenders. These businesses are better businesses with product and service offerings that are differentiated. The scale and scope of the businesses give them competitive advantages, the geographic spread of the businesses is another positive to the companies. So, the recapitalization of BMC gave it a great financial position for the ability to participate in the recovery.

August of this year was kind of a culminating event when Builders FirstSource and BMC announced they were merging together to form by far the largest building products distribution company. And it’s not just this consolidation. In 2015, both companies also participated in a consolidation event. You

INTERESTINGLY RIGHT NOW, WE’RE IN THE MIDST OF WHAT CHARLIE MUNGER A LOLLAPALOOZA EFFECT.

tunity is substantial. We believed that the 1 to 1.1 million annual single-family home start number, which had been a 50-year average, would continue to hold, and that’s during a period of time when the beginning population was half of what it is today and the beginning number of households was half of what is it today. So, to get back to that modest trendline we thought was almost a surety.

The timing of it, however, was uncertain. So, we identified the companies to invest in.

Now, frequently, when we do invest in cyclical businesses like this the recovery often does not happen as quickly as we anticipated. But in the meantime, things are still happening in the industry to those well-managed differentiated companies that

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had a radical change in the structure of the business, the competitive offering of the company, its continued growth and valueadded services. So, therefore, it’s continued differentiation from its competitors. So, it’s, we think, an excellent example of how a patient investor in a cyclical business has an opportunity for an entry point and a longterm runway for opportunity that even today we think is still in middle innings of a very positive trend.

And we also thought that there was a number of suppliers that also were favorably affected by the consolidation trend. So, one of those is Norbord. And, David, you’ve done a lot of work on it and maybe you’d share with us our investment thesis.

DAVID: Thanks, Bob. Norbord actually is a great case study for how we invest.

Norbord is the largest producer of oriented strand board, or OSB, which is a replacement for plywood used in building homes.

Now, interestingly, we spend a lot of time speaking about investing in cyclical companies, which is a dominant theme across our portfolio, and I think it’s actually one that differentiates us from the majority of investors who list cyclicality at the top of their list of what to avoid.

Of course, or maybe ironically, the reason we often find bargains in cyclical industries is because there’s less competition in such a large segment of the market. But that’s just one of the tools or frameworks we utilize at Robotti to identify potential value. So, we eventually found Norbord through a company it acquired because that company was raising capital through a rights offering which was backstopped by its largest shareholder. That’s another tool we use to identify potential value.

Once identified, we were able to really quickly increase our conviction on the business because, as Bob said, his experience on the BMC board had given him this lens into the industry to help us understand it holistically. Now, Norbord has experienced most of the same dynamics as Builders and BMC that Bob just spoke about. And specifically, it’s continued to

see the benefit of a more consolidated industry over the past decade.

Now, with what is a somewhat fixed amount of supply currently available in North America, the survivors have become more dedicated than they’ve ever been in the past to producing only what they can sell.

And this rational discipline production will eventually result in a more rational and less volatile pricing, which will favor the OSB producers.

Interestingly right now, we’re in the midst of what Charlie Munger a lollapalooza effect. Initially when the pandemic hit and we had to lockdown, Norbord’s stock was hit especially hard because of its economic sensitivity. And management quickly responded imprudently by enhancing their balance

OUR INVESTMENT APPROACH SHOULD BE LABELED ‘VALUATION INVESTMENT.’ VALUATION MATTERS AND IS A KEY DIFFERENTIATOR BETWEEN OUR INVESTMENT APPROACH AND MUCH OF THE MARKET.

sheet liquidity, but also by curtailing production capacity.

The curtailments that they took were on top of what had already been taken offline in the second half of 2019 as the business focused on matching production with demand.

Now, of course, what I don’t think anyone predicted is that instead of a pullback in housing demand, the pandemic would actually be the catalyst to unleash this previously dormant demand for new homes, the one we initially identified that Bob just spoke about

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and that was one of our key investment factors underlying our investments in the home building industry.

When this surge in demand for singlefamily homes met an even more limited supply of OSB, Economics 101 took over and the price of OSB skyrocketed to all-time highs.

And we do expect that prices will moderate from the unusually high level threat.

But we also believe that the dynamics are now in place to sustain a disciplined pricing environment for a considerable period of time allowing Norbord to have an extended runway to produce significant amounts of free cash flow.

Now, the stock’s up an astonishing 330% from its March low. It was currently up just over 45% year to date. But just 12 days ago, West Fraser, which is a Canadian-based producer of lumber and wood panels, made an all-stock offering to acquire Norbord in a transaction that, once it goes through, will value the company at $37.78 a share.

And we’re still in the process of doing our diligence on West Fraser so we can understand the impact of our unchanged thesis on OSB and Norbord, how that will impact the new business combination. And in fact, we look forward to speaking with West Fraser’s CEO later in this week, which is an important part of the diligence we do. As we make sure we’re invested in the securities of the business’ or businesses’ best position to take advantage of what we really believe is a tremendous multi-year opportunity.

BOB ROBOTTI: We are value investors; we are unabashed value investors in a time where that label has been tarnished.

It’s the confluence of events: macro environment, point in cycle and differentiated individual company (or companies) and our active engagement to maximize the outcome – the right place, the right time, the right company and a compelling, strong opportunity.

Moreover, we are not just doing research; we are active owners of our investee companies, seeking to increase value whether by the size of our holding, by writing letters to the board or joining the board and having a ‘seat at the table’ and more direct say.

Importantly, while we discussed homebuilding specifically, much of our remaining portfolio consists of businesses in other sectors as well also in various stages of recovery similarly seeing COVID accelerate industry trends which will accelerate recoveries and strengthening economics. The present value of the future cash flow of these businesses are misunderstood due to the view from the rearview mirror market analysis. These investments reflect a decade of very modest economic growth. Valuation is the ultimate determinant of an investment’s merit. In the end, the market is a weighing machine. Cash is what equalizes all businesses, not popularity.

Our goal is always the same, as unabashed value investors, to maximize the valuation and, in doing so, the opportunity. It’s factbased research on individual companies, doing analysis, and that highlights the attractiveness of the investments that we’re invested in today. Our investment approach should be labeled ‘valuation investment.’ Valuation matters and is a key differentiator between our investment approach and much of the market.

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WHY WE SEEK THE COMPANY OF LONG-TERM COMPOUNDERS WITH SOUMIL ZAVERI, DMZ PARTNERS Soumil is a featured instructor at Best Ideas 2021

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he following article is excerpted from a letter by MOI Global instructor Soumil Zaveri, partner at DMZ Partners, based in Mumbai, India.

The DMZ Partners Conglomerate continues to perform robustly, and we remain very constructive about the long-term prospects of each of its constituents. Each of our companies is a sector leader, earns superior returns on capital, has deep and difficult to breach moats or competitive advantages, is gifted with very long reinvestment runways to redeploy profits back in the business, and is run by exceptionally capable and high integrity management teams. This is a rare combination to come across, and the importance of these virtues becomes increasingly apparent while navigating a crisis. Since one cannot predict when a crisis will come along or how long it will last, I’ve found it ideal to remain in the company of only companies with characteristics that typify “compounding machines”.

It is even rarer to have the opportunity to own such businesses at prices that allow for long-term compounding to kick-in, and we’re fortunate to own eleven such businesses in our portfolio. While I’m always reticent on return expectations, in my analytical judgement, I find it probable for all our companies to grow their core earnings

power materially over the next 10-12 years. If they’re successful in doing so, we in tandem, are likely to benefit from robust long-term returns. To the extent, that over a decade, in my view, it will be of limited relevance whether you bought the DMZ Conglomerate in February 2018 or February 2020 – a factor which has a bearing on how your returns appear thus far.

One of the greatest advantages of owning compounders is that the relevance of your time of entry reduces as you lengthen your investment runway with time!

We’ve often seen exceptional investments stagnate for three years, only to triple in value in the fourth. Immense time, energy and money is wasted trying to predict when that “triple” will happen rather than patiently partaking in the ownership of the business as it continues to perform robustly over years. It’s instructive to appreciate how many investors at some point owned a business that subsequently went on to multiply 10-100 times in value yet how few benefited from the enormity of that outcome.

To put it in perspective, almost 20 years ago, HDFC Bank had over 290,000 shareholders on record, in a year in which the bank earned an annual profit of just over INR 200 crores and was valued short of INR 6,000 crores. What percentage of the

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shareholders on record in March 2001 do you reckon, benefited from the multidecade wealth-creation opportunity? I’d wager a large percentage of these owners from 2001 migrated away to new, “theme of the year” stocks based on meaningless heuristics such as “this stock’s already well known” or “this stock hasn’t done much for me recently” or perhaps the most dangerous, “this stock’s now trading too rich relative to peers”.

Some investors seem to have an obsessive preoccupation with how their performance looks vis-à-vis others. In my view, this can wreak havoc on how one allocates capital. If you’re trying to maximize an outcome over a decade you need to give yourself liberty to deviate from others over shorter, arbitrary periods of time. If underperforming broader markets & peers for certain intervals is the price of admission to exemplary long-term performance, one should sign up eagerly!

This reminds me of the experience of a dear friend who more than tripled his wealth between 2009-2010 as a professional investor through investments in Kotak Mahindra Bank, Bajaj Finance, Gruh Finance and Pidilite Industries. He exited all four after an exemplary return out of fear of future underperformance given that valuations of these companies “got too rich”. He went on to buy a basket of “relatively cheap” stocks to ensure

he doesn’t lag relative to peers over the year ahead. He has made several trades since.

He grudgingly admits that his results are nowhere close to what they could have been had he simply stayed put in the original four.

Crucially, I don’t think he realizes what that would have entailed psychologically and if it would have suited his comparative mindset.

If he had chosen that path, there would have been many quarters and years where his returns looked mediocre relative to others’ high-flying results from exciting new ideas.

Outperforming over decades necessitates having a certain nonchalance about underperforming relative to whatever anyone cares to measure over shorter periods of time.

Microsoft Excel is a powerful tool to put into perspective difficult to visualize longterm financial outcomes, test hypotheses and identify and isolate potential limiting factors in terms of how a business model may evolve.

However, you have to be very careful in terms of what you decide to start measuring.

If you start managing what you ought not to have measured, you’re in trouble! Using excel to slice-and-dice weekly/ monthly/ quarterly relative-returns of investments over arbitrary intervals and allowing that to guide your investment approach will lead you astray. In my view, it’s a perfect recipe for how not to create multi-generational wealth in the mar-

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kets! You may or may not lose your capital but you are very likely to lose your sanity.

Also, I think it’s vital to be at terms with the idea that different approaches will do well at different phases in time – we may do exceptionally well relative to a respected peer in a particular quarter only for our peer to catch up while we languish a couple quarters later. This does not preclude both participants from doing equally well over a decade! Given equally worthy but distinctly different approaches between two thoughtful investors, this is par for the course. This does not require an introspection on what one should do differently as much as it requires an acceptance of the nature of markets – returns and price movements are lumpy – excel doesn’t capture that!

Compare long-term processes and adherence to a replicable approach rather than short-term outcomes. There will be times when say, Infrastructure or Capital Goods may perform exceptionally well, leaving us out in the cold. At such times, I’ve always found a special pleasure in celebrating the success of others who may have benefitted from their insights on those industries.

As Dad often warns, “If you can’t celebrate the success of others, prepare for lifelong misery!”

This is not to say that “Never Sell Anything” is an ideal investment strategy. The key is in recognizing whether you own something irreplicable which competitors find practically impossible to displace and, whether the reinvestment runway for the business can be measured in decades. In such circumstances, “Never Sell Scalable Compounders” can well be an investment strategy while remaining acutely mindful of the opportunity costs you are faced with from time to time. If we are fortunate to be in the company of exceptional businesses run by opportunistic founders, we would be remiss to move away prematurely.

Reinvesting proceeds from the sale of exemplary businesses shifts the burden of responsibility onto our shoulders which often aren’t quite as capable as those of the management teams that we may have parted

ways with. This resonates with a quote attributed to one of the greatest quarterbacks in American football history, Tom Brady: “We haven’t come this far to just come this far!” This phrase resonates strongly with the long growth runways our companies are blessed with given their low single digit market shares relative to the multi-decade opportunity-set that lies ahead.

There are perhaps millions of investors, in aggregate, on record in our portfolio companies. Unfortunately, it’s likely that only a relative handful will have the conviction to stay invested over decades and look far beyond the consequences of a weak quarter, a slow year or a slightly frothy valuation.

Having said that, I’m certainly not oblivious to opportunity costs. In learning from

ONE OF THE GREATEST ADVANTAGES OF OWNING COMPOUNDERS IS THAT THE RELEVANCE OF YOUR TIME OF ENTRY REDUCES AS YOU LENGTHEN YOUR INVESTMENT RUNWAY WITH TIME!

like-minded global investors, one of the common regrets I’ve heard from colleagues who’ve been investing for several decades pertains to how they’ve unknowingly downgraded the quality of their holdings because they thought they were being thoughtful about opportunity costs and valuations in selling Superior Bank at 4x book value to buy Mediocre Bank at 1.2x book value, without realizing that book value is doubling every 3-4 years at Superior but is fictional at Mediocre! In effect, swapping the Swiss Franc for the Venezuelan Bolívar. On the other

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hand, the swaps they celebrate are when they sold Exceptional FMCG at 40x earnings (long-term earnings potential of 7-9%) to buy Exceptional Platform also at 40x earnings (long-term earnings potential of 18-25%).

If you’re making swaps, be mindful of which currency you’re shifting to. If you’re weighing opportunity costs, be sure to stick to analogous currencies!

In following an approach like ours, a multi-sector breadth of opinions rarely adds value. It is the depth of our conviction, backed by insights that hold sway over the long-term, that is truly critical. It’s a lot more about understanding the long-shelf-life stuff (the quality of future capital allocation decisions by management, as an example) that matters than the short-shelf-life stuff

as well as or better than the person you’re buying from or selling to, brace for disappointment.

More importantly, I don’t think understanding every sector (or claiming to) is necessary to create robust long-term returns.

We take particular interest in studying Banks & Financials, Consumer-oriented businesses, Business services, select Healthcare, select Technology and Platform companies to name a few. Spaces like these, in our view are the common ground between niches where meaningful wealth can be created over time on the one hand, and spaces we are capable of intimately understanding on the other.

People often refer to this as “fishing where the fish are”. We continually work on assessing what sits within this circle of opportunity & competence.

The urgency with which we seek to grow the circle is a direct function of the longterm wealth creation potential that certain niches have proven to create over time. As an example, I’m very quick-footed to initiate research projects on technology-enabled platform companies whereas my enthusiasm would be muted in case of a capital-intensive mining business, as experience, and the heuristics it arms us with, has taught me that the kind of companies I can own without disrupting a peaceful night’s sleep, are rarely found there.

To allow for the prospects of the compelling businesses we own today and the efforts of the people that helm them to truly transpire into results, we hope to hold these businesses in our portfolio for several years, barring errors in our judgement, material changes in their fundamental trajectories or dramatic changes in the opportunity costs entailed in staying invested. This is seemingly simple, but not quite easy! One of the reasons I think it isn’t particularly easy for people to do this despite a good sense of judgement on which 10-15 companies may truly be longterm compounders is a lack of focus (being distracted by relative underperformance over a year, as an example) and a preoccupation with activity (not wanting to be left out of a recent compelling IPO, as an example).

COMING TO TERMS WITH THE IDEA THAT YOU CAN’T BE AT ALL THE RIGHT PLACES AT ALL THE RIGHT TIMES IS HARD BUT IMPORTANT AS A TEMPERED INVESTOR …

(a view on upcoming monthly sales data vis-à-vis street expectations). Additionally, friends are often intrigued by how I do not attempt to follow certain sectors like metals or capital goods, as examples.

In Richard Feynman’s words, I think it’s important to be acutely aware of the difference between knowing the name of something versus truly understanding something – what makes it redundant, how it works, why it works that way, how long it is likely to continue working that way, why can’t someone else do it cheaper or better and so on. If you can’t answer these questions

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a somewhat broader range of outcomes, at prices which are compelling relative to any other time in recent history. In my view, we would be remiss not to act in such circumstances. We used the sale proceeds to initiate a long-awaited position, scale positions in two holdings we had initiated in the prior quarter and scale-up an older position available at lucrative valuations. That said, we continue to hold a constructive view on the companies we exited and will celebrate their success!

I thoroughly enjoy sharing nuances of our investment approach with you on a quarterly basis. Please do not let my passion for our approach be interpreted as though it were a verdict that this is the only way. There are many successful approaches. Multiple paths may lead to the destination all of us seek to move toward. I’ve simply chosen to remain steadfast in following one which best suits my skillset as well as my mindset. As always, I remain humbled by your conviction to invest alongside us and strive to remain worthy of it. Please stay safe and retain caution in these unprecedented times.

Coming to terms with the idea that you can’t be at all the right places at all the right times is hard but important as a tempered investor – It keeps you focused on your north star, staying true to your foundational principles, steadfastly focussed on what you can do well in a replicable manner – this is the source-code of a robust process which will yield superior long-term outcomes.

The quarter gone by gave us an opportunity to exit two of our smaller positions which we had partially begun trimming in the prior quarter. We found it difficult to envision these holdings as sizable positions over time.

These exits were not necessarily motivated by the ongoing pandemic. Rather, given that we prefer to remain fully invested, we need to be acutely aware of opportunity costs.

It is very rare to have the opportunity to add resilience to the portfolio without compromising the long-term return potential of our holdings. This can be done by using sale proceeds to buy more heavily into businesses with potentially longer growth runways and substantially larger market opportunity sets and, which are able to do well in

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AMIT WADHWANEY ON INTELLIGENT INVESTING IN A CHANGING WORLD In an episode of the Latticework Podcast, presented by MOI Global, Amit Wadhwaney, portfolio manager and co-founding partner of Moerus Capital Management, discussed Moerus Capital’s approach to intelligent global investing in a changing world. This conversation was recorded ahead of Amit joining the MOI Global community at Latticework NYC 2017. Amit is a featured instructor at Best Ideas 2021.

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Interview with MOI Global

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MOI Global: I’m familiar with your background and your expertise. Will you please share a bit more of your personal journey and how you got to your current role?

Amit Wadhwaney: Shai, the journey begins not in the United States and not in New York; it starts in Canada, where I initially began to study economics. I already had a couple of degrees — one in engineering and one in mathematics — and economics became an interesting sort of pursuit in my spare time. I got a couple of degrees in economics. During my pursuit of these degrees, I encountered a fascinating book written by an economist and, in hindsight, I realized, an extraordinary investor.

The economist in question was a gentleman by the name of Martin Shubik, a mathematical economist, and the co-author of the book is Martin J. Whitman. The book I’m referring to is The Aggressive Conservative Investor, which was originally published in 1979, and which was really my first introduction to, I’d say, deep value investing. It actually pre-dates my encounter with Ben Graham’s The Intelligent Investor and much else that followed. That was the beginning.

I’d never taken any courses in accounting, so much of that book was a mystery to me. I got my master’s in business, where you study accounting, finance, and such, and I realized much of what I was learning at the university was completely counter to what I had read in that book. What I was also curious about was that the ideas of value investing articulated in the book were very, very different from what one learned. And, in fact, it was much more intuitively reasonable to pursue an investment path — personally, initially, and subsequently professionally — based on the principles laid out in the book.

I had the good fortune of winding up working with Marty Whitman starting in 1990. I was at Third Avenue Management, in a couple of stints, until 2014. That was where, I suppose, I cut my teeth in value investing, à la Third Avenue. We began to adapt it to non-US investing starting in the late 1990s, and we built the international business at Third Avenue. What was interesting was, there’s an approach to value investing at one end of the big value investing tent, I suppose, where you focus on great cheapness, and the measurement of cheapness is what differentiates this approach.

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Usually, there are a variety of definitions of how people measure cheapness: people look in terms of prospective growth and discounted cash flows. Our approach is to think about cheapness in the here and now. It’s a bit more of a straitjacket — it lets through far fewer securities as potential objects of investment interest, but nonetheless it’s a very conservative approach, which obviously appealed enormously to me. I left Third Avenue in 2014, and a group of us — three of us, members of the (then) International Team of Third Avenue — founded Moerus Capital Management in 2015.

All we do is one thing: we run a global portfolio that spans the entire globe, developed and developing markets. By “developing,” I mean emerging and frontier markets. And that’s how we approach the world.

MOI: How do you unpack the phrase “Intelligent Investing in a Changing World?”

Wadhwaney: Let me drop “intelligent” from that. Let me address, “Investing in a Changing World” — and be mindful that we will see whether, ultimately, these thoughts are intelligent or not.

When you’ve been doing this for a couple of decades, you’ve seen a lot of things. The “lot of things” you’ve seen involve tremendous amounts of upheaval, upset, dislocations. Changes are really par for the course for us; change is expected. Changes usually have an element of surprise, and the element

of surprise often causes discomfort; discomfort, in turn, presents opportunities. So, the way that we’ve approached it is to effectively coexist with this sort of stuff.

Let me talk about how we coexist with it. When you invest, there are a number of things that are — I don’t want to use the words “controlled” or “controllable” because there’s very little that’s ultimately controllable other than your decision to own something or not to own something, and if so, at what price; that is the one decision you have to make. But you have to do this in an environment where things change and the changes which are unexpected that are often the source of discomfort, and, as I said before, potentially opportunities.

So, how do we deal with it? Well, first, we have the core investment discipline, and the discipline really attempts to guide us in the direction of extremely cheap securities. Not just cheap, but cheap as well as companies that have a very high likelihood of passing through difficult times unimpaired and unchanged, largely unmodified — undamaged, if you will — through hard times. So, you always prepare for difficult times — that is, in anticipation of hard times, whether they come or not. If they come, well, you’ve largely prepared yourself.

For example, when you buy something that’s cheap, there’s always a reason why

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it’s cheap. If the reason why it’s cheap has something to do with inherent fragility of the business, you just don’t do it. On the other hand, if the cheapness is a function of some sort of unpopularity or being in some kind of unusual business that is utterly out of favor, or it’s in a corporate structure that’s analytically complex, you probably already have cheapness built in. Now, alongside the actual cheapness — in terms of value — you should always determine if there’s anything unsafe. The lack of safety or risk of permanent impairment (a.k.a., blow up risk) of a company can stem from factors internal to a company or external to a company. Once you’ve analyzed these potential sources of risk and disposed of them as being things that could have a low likelihood of hurting your company, then you have something that is probably robust enough to be held through good times and bad. The good and bad times, by which I mean things that are anticipated and things that are not anticipated.

When we invest, we invest with a least a three-to-five-year horizon in mind. Historically, we’ve invested over six-year time horizons, and over six years of holding, lots of things could happen. Over a short period of ownership, fewer things happen; but over a longer ownership period of a given security, the extent of variability in the economic environment, the industry, the business, the politics surrounding a company, can be enormous, and the amplitude of the variations can be enormous. So, you prepare yourself: you start off with a very defensive posture, and that’s how you protect yourself.

Now, this recent period has had all sorts of upsets. Brexit is something that, I think, turned the world on its head for many people and many companies. Our approach to Brexit was not, “What’s gone down, based on Brexit, right here and now, in the United Kingdom?”

Our approach was slightly different.

The opportunity that Brexit presented to us was of the following sort: Brexit — the vote — happened, and the decision that Britain was going to leave was announced.

Well, what that precipitated was a whole slew of very cheap securities across Europe,

notably in Italy especially in the financial services sector. They were probably some of the cheapest things there in the spectrum of European securities. When news of the Brexit vote came out, the credit spreads in Italy widened enormously. What was very cheap before now became extremely cheap, and that was the nature of the opportunity that a little upset hundreds of miles away presented us. That turned out to be the starting point of our investment in Italian financial institutions, which has panned out, actually, quite decently.

Again, as for the company in question that we bought at the time, Mediobanca SpA, there was no question whether or not it was going to be a survivor. It was very solvent, very well capitalized, deeply undervalued, and clearly going to be a survivor through many different situations and scenarios of adversity that we could think about. All the Brexit vote did was present us with an opportunity to buy this stock very cheaply.

Upsets and discomfort provide us opportunities, and uncertainty is not to be shunned or fled from. Think of uncertainty and the associated discomfort as a source of opportunity for you. That’s historically what it’s done for us: it’s presented us with opportunities, which is one of the reasons when we’ve seen places where there’s enormous amounts of uncertainty; and the crystal ball looks quite murky — those are very interesting places for us.

MOI: History might not repeat but it could rhyme; could you elaborate on your observations?

Wadhwaney: There are things that sort of resonate or echo; let me give you one very quick example, a sense of déjà vu. Early in my professional investment career, one of the first financial market crisis I encountered was in 1997-1998. In 1997, the starting point was Thai banks beginning to teeter because of an increasing amount of loans they had extended beginning to turn bad. Thai banks had lent money quite recklessly to all sorts of real estate developers, the creditors of the Thai banks started to pull their money, and the whole thing began to slowly spiral

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downward; initially there was tremendous amount of denial in other parts of Asia. Everyone sort of tuttutted and said, “Well, this is a problem with Thai banks. Thai banks have been engaging in foolish lending, and of course it’s only a Thai problem.” Well, as history will tell you, a year later in 1998, most of Asia was sucked into a black hole called “The Asian Crisis.” You had runs on banks, financial companies blowing up in Korea, and so forth, so there was a tremendous amount of stress in many of the countries — arguably much greater in the lesser developed ones at the time, places like Indonesia, Malaysia, South Korea, and Thailand.

Fast-forward a decade later. Now, take the locus of the drama, which then shifts to the United States. The big difference: the United States has big, very large, and deep capital markets. So it would seem odd to assume that all the stuff that happened in Thailand and in Asia during the 1997-1998 period would happen in the United States. Well, the United States may have been a large capital market with a diversity of financial products to finance all kinds of activities; however, starting in 2007, you started to see that the residential mortgage-backed securities market started to teeter. And you saw that happening not just in the United States, you also saw that happening in the United Kingdom. And of course, at this time, in the developed markets, there was a lot of tuttutting that came out of Europe saying, “Oh, it’s the Anglo-Saxon nations who are doing this.

This would never happen here.” And again, as we know, in 2008, the global financial crisis sucked Europe right into it. And of course, their banks were stressed, and there was trouble there as well.

The same canary gagged the second time, and you could see that happening: the denial that people engaged in Asia, happening yet again on these shores. So, always be very wary when people say, “It can’t happen here.”

Well, amazingly enough, it happened in the United States. I will confess, the echoes were certainly there. We certainly did not see lines of people waiting outside banks to pull their money out in the United States as we saw in

Asia — when I visited Asia in the middle of 1998 while the Asian crisis was in full blossom. But, certainly, it was a scary time in the United States, which also provided tremendous opportunity yet again.

MOI: You’ve also lived through multiple market cycles.

Wadhwaney: I would not describe any ability on my part to predict or forecast — I certainly wouldn’t do that. However, as a price taker, you’ve always got to be ready. Usually, the way we operate is we read lots and lots about many different companies. You learn about companies and just basically put it aside, for whatever reason. Oftentimes investments are not cheap enough, oftentimes we think there are some deal-breakers with them: maybe something’s wrong with the balance sheet, so on and so forth. There are always reasons why something is less than perfect to be included in a portfolio.

However, sometimes a lot of things come together. And usually when things turn ugly in downturns, that’s when you find that opportunities become most attractive and most available at the right price, and this is why we are rather price takers: market cycles, market fluctuations, provide those opportunities to us, rather than us thinking in terms of, “Will there be or won’t there be…?”

For example, the last time one of the great opportunities occurred to buy securities in India was in 2013. There was a so-called “tapertantrum” when Bernanke started making noises that he was going to raise rates; at that time, India’s capital position was poor.

Of course, since then they’ve had elections, a new government and things have gotten a bit better since. I have no idea when the next opportunity might occur. Of course, if I had some prescience about the cyclicality of the market there, I would be ready and waiting because there could be great opportunities.

But generally, as a price taker, it behooves one to be very aware of the world in which you’re investing — in terms of circumstances in given markets, how securities are being valued — and take advantage of that.

MOI: I’d love to elaborate in your global perspective.

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Wadhwaney: Collections of countries have been impacted for a variety of reasons, not the least of which, I suppose, is the commodity-related exposure. Let me speak to two countries in particular. One country is Colombia. Colombia is not the top of the hit parade, as it was for a number of years — post the early 2000s — when Colombia began to derisk. The government was very much in charge of taking care of the security situation, and oil was doing very well. Oil has, of course, since then tumbled — tumbled enormously.

So, what’s this all got to do with Colombia? Well, as the security situation in Colombia became better and oil prices rose, the realization dawned that there were enormous parts of Colombia which were hydrocarbon rich and had not been explored.

There was a tremendous oil-boom that took place; it was so large that, at one point in 2014, oil accounted for more than half the export earnings of the country.

Well, then oil collapsed. Oil prices collapsed and down went the export earnings. The export earnings tumbled, the currency tumbled, and in turn, inflation went up and interest rates went up. So, from the perspective of a consumer, that’s pretty toxic stuff. Your purchasing power tumbles, interest rates go up, and inflation goes up. It’s kind of messy. So, that presents a class of opportunities.

For example, retailing: retailing in a young, growing country like Colombia is potentially an attractive business for investors. However, consumer-related companies in developing markets usually are quite expensive because, I think, the theme lures most people to invest in emerging markets is, that of the growing purchasing power of emerging market consumers, and so investors always pay up for consumer-focused companies. Well, the company in question is one I’ve known for more than a decade before we put our first dollar to work there — a company called Almacenes Exito SA, which, in turn, had been pummeled because of tumbling purchasing power, rising interest rates, and rising inflation rates. There were then, a whole bunch of other interesting op-

portunities stemming from the same larger phenomenon of a tumbling currency and a slowing economy, and so forth, so Colombia presented a collection of opportunities. But the one that stood out as being unusual was the company called Exito, which was not just a Colombian company but a pan-Latin American retailer. It then controlled the largest Brazilian retailer and, as a result, Exito was the largest pan-Latin retailer at the time.

Which takes me to the second interesting locus of opportunity. Tumbling oil prices were only a part of the story here — but it was not just oil prices. Brazil is a country that has a gigantic company called Petrobras, which is largely controlled by the government. Now, when you have a large oil company controlled by the government that has an enormous exploration program underway, there is the opportunity for a lot of mischief, shenanigans, and siphoning cash away. And of course, suddenly, an investigation of all these activities by an activist judge began. Brazil went through a period of self-examination, with even the most iconic of their leaders being convicted of engaging in illegal activity such as receiving some sort of assistance towards the purchase of a beachside apartment in Rio. So, this conviction was quite remarkable and sort of a first in the history of Brazil. The extent to which this corruption probe uncovered people, it has ensnared major business leaders, major politicians. So, there was a tremendous clean-up underway.

But what did this have to do with the stock market? Well, basically, this resulted in a tremendous paralysis in terms of doing business the traditional way, which in turn fed into a slowdown, a reluctance to engage in capital expenditure, lest you did something which ran afoul of what was appropriate behavior. This really deepened an economic slowdown, which shouldn’t have been as deep as it has become because of these other investigations. Brazil presented us with a number of sources of opportunity.

It’s much more broad-based and a much larger market than Colombia, and so the opportunity set was much broader.

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MOI: The concept of investing bottomsup, but worrying top-down — how do you begin to worry?

Wadhwaney: For every company that we think about — the analysis is very centered and focused on the individual company that we consider investing in. It’s very important for us to know how the company makes money, under what circumstances would the company would lose money, and so on and so forth. So, you have a good sense of how the world, macro factors particularly, affect the business. We really don’t think of ourselves as having the ability to forecast macro — I would argue we are quite macro myopic.

That said, while we are macro myopic, we are not oblivious or blind to macro factors.

Macro factors can really take apart a company. For example, when you think about a company, you do not think about the company in isolation; you think about how different macro factors, if they were to change in an adverse manner, affect the business itself. Companies can be affected, generically speaking, by things like interest rates, inflation rates, exchange rates — so you think in terms of “What is a plausible scenario of adversity that [could arise from] changes in any of these variables?”

Now, understand that we own things for a number of years, so it’s a different kind of band how much interest rates could vary, for example, over the next year versus over the next five or six years. If you are to think in terms of four, five, six years, you should imagine that it could be subject to much higher interest rates than if all you did was hold it for six months or a year, for example.

So, you do, effectively, some sort of stresstesting in terms of adverse developments in factors macroeconomic.

Similarly, you have to think in terms of, “Other than macroeconomic factors, what other source of adversity could hit your company?” It could be changes in governance, in regulation — any number of factors that can affect you. Again, the attractions are often on a bottom-up basis, but you have to make sure that these securities that you are buying are not going to be hurt by the adverse

shifts in factors macro-economic and other environmental factors, top-down.

MOI: Are there any patterns in what you’re trying to avoid?

Wadhwaney: We try to avoid business models that are less than robust. For example, there are some business models that are very good and function really well in the normal times — when things are good, they do great; in bad times, they break down, and break down very badly to the point that the company goes bust. As a case in point, think about a business model requiring a good credit rating, all the time, just to stay in business — this was a requirement for companies like Bear Stearns and Lehman Brothers. They had to have a good credit rating. When times turned bad and the rating agencies downgraded them, they suddenly lost access to the commercial paper market and short-term financing, and the business model blew up. That’s the kind of fragility of a business model that we’d like to avoid.

MOI: Are there commonalities in the macro concerns?

Wadhwaney: A recurrent source of trouble that sort of ensnares people again and again and again and again — and it’s very odd — is currency mismatches at the sovereign level and the corporate level. By which I mean, you often have times when borrowing in one currency is so cheap — a currency which is different from the currency of the issuer. An example would be the Mexican banks issuing paper, issuing debt, in United States dollars in the early and mid-1990s. That in itself led to the big “tequila crisis” when there was a run on the peso and the peso collapsed; the currency mismatch, at the level of banks, [resulted in] many of the banks [going] bust.

The same thing happened in 1997 and 1998, Thai banks, Malaysian banks, and Indonesian banks — they borrowed in United States dollars because it was very cheap to borrow in dollars. And then, they turned around and lent the money to local borrowers in the local currency. They assumed that all these liabilities could be repaid at a fixed exchange rate. Unfortunately, the currency

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was devalued, so the size of the liability ballooned, and ballooned massively.

You saw that in 2000-2001 in the case of Argentina, when the link with the United States dollar and the Argentine peso was severed and the peso dropped like lead, from being worth one dollar to twenty-five cents, so liabilities multiplied four-fold. So, that’s a theme that has just recurred again and again and again. Now, what’s the most recent version of the same theme? Here is a guess I’ve worried about this since 2013 — those chickens haven’t come home to roost, but they may well do, and hopefully they won’t. There’s been a tremendous amount of borrowing in United States dollars, unhedged — financially-unhedged or operationally-unhedged — by issuing companies, in emerging markets which typically don’t have operations which produce United States dollars.

If, for example, you are a Turkish construction company — and I mention Turkey not because of anything other than the fact that there are lots of Turkish construction companies — private companies — whose revenues are totally Turkish Lira-based but have borrowed in United States dollars.

Were the Turkish Lira to come under pressure, their liabilities would start to balloon enormously. And, being a Turkish builder, with your business largely in Turkey, you do not have a built-in currency hedge, based upon the nature of your business itself. That exposure continues to this very day. I have no idea if and when it gets worse, which precipitates the next sort of crisis.

MOI: I’d love to steer the conversation towards you, if we could. You’re very generous in sharing your wisdom with our community.

You’re providing us so much of your time.

What’s motivating you to be so giving?

Wadhwaney: Well, let’s talk about the source of the giving-MOI. The source — I think of lots of thoughtful conversations, ideas, and thoughts about investments and investing. And, really, it goes beyond just individual investments. MOI has been the source of an education for me. In my few words, hopefully I can leave behind something that’s useful, something in kind that is symmetric with what people have done for me over the years, having read MOI and watched various interviews and conversations that you’ve had with people.

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RUDI VAN NIEKERK WHAT DOES IT MEAN TO BE A GREAT INVESTOR? This article is excerpted from a letter by MOI Global instructor Rudi van Niekerk, founder and principal manager of Desert Lion Capital in Cape Town, South Africa. Rudi is a featured instructor at Best Ideas 2021

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E

ach of us holds our own unique image of what it means to be a good spouse, good parent, good person, and good investor… as it should be. Here, I want to dwell on my definition of a great investor.

What is that image that I’m holding in my mind? What am I aspiring to? I’m not in the habit of wasting time – not yours and not mine – so I wouldn’t expand upon this topic if I didn’t think it warranted meditation.

Desert Lion has a one-man investment committee, which we view as one of our structural advantages. If I were considering whether it is a good idea to invest in Desert Lion, my focus would be very much on the paramount question of what this one-man believes it takes to be a “great investor”.

Forget the pitch decks. The next few paragraphs could constitute 80% of your decision-making process and due diligence.

View it as a negative filter. You might agree with what I say. But if there is anything in here that you do not agree with, better to move on. Job done.

What does it mean to be a great investor?

There is a profound reality when it comes to returns. They matter. One can have great returns and not necessarily be a great investor.

But without great returns one cannot be classified a great investor. I want to build a longterm track record of great returns. It drives me. It consumes me. Nothing gives me more joy than the possibility of one day reflecting on an excellent 40-year track record… But not at any and all costs. I believe that a great investor generates meaningful returns.

I want to feel good about the returns Desert Lion generates. Not just quantitatively, but also practically – how. I am an investor and a fund manager simultaneously. Clients come first. Period. A great fund manager aligns his interests with those of his co-investors (limited partners), creating a structure with harmonious incentives. Then it is easy.

The best way to deal with the conflicts of interest is to avoid them entirely. I also want my co-investors to have peace of mind. They should know that their capital is well cared for. In a fund management environment that means structure, reputable service providers, reporting, continuity, compliance, controls and trustworthy partners.

A great investor views capital as an enabler and rewarder, allocating where it is expected to have a net-positive impact on society and the greater construct. I have no interest in enabling or rewarding initiatives that generate returns using parasitic or destructive practices. In my worldview, I only live once. I want to invest my money – our money – in good companies.

A great investor has the right temperament. I don’t want to generate returns that are only slightly different to the index and any peers. I want to generate returns that are materially different. Unlike the black box humming at Renaissance, in fundamental investing it is only possible to generate exceptional returns if you are willing to accept periods of underperformance. I am intellectually, emotionally, psychologically and temperamentally content with this notion.

A great investor prefers the intellectual honesty of “I don’t know” over smart pretention. A great investor does the work, applies rationality, and acknowledges that he or she can never know everything. A great investor does not allow endless minutiae to cloud common sense. Rarely do more than three or four important factors matter materially.

Being a charismatic capital raiser is not a requirement for being a great investor, nor a great fund manager for that matter.

In fact, there seems to be a negative correlation. I want to focus my time on constantly improving as investor and on communicating transparently with co-investors. If I do this diligently and reliably all my life, it is unlikely that capital won’t find its way to Desert Lion. A great investor does not have to be famous. Ideally, a great investor ends up rich and anonymous.

A great investor knows that there is a delicate balance between remaining faithful to his core tenets and constantly improving.

I am committed to always evolving as an investor; I will never be completely satisfied that I’ve reached my potential. But the process of such maturation should be bridled by humility (staying within my circle of competence) and foundational principles.

And finally – earn with integrity. The most important asset we have is our reputation.

Without it, everything else amounts to naught.

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FOCUS ON GOOD DECADES, NOT GOOD DAYS WITH PETER MANTAS, LOGOS LP Peter is a featured instructor at Best Ideas 2021

W

e had the pleasure of speaking with Peter Mantas, general partner of Toronto-based Logos LP, in an interview in 2019. Peter discussed his background and investment approach at Logos LP, an investment fund he started with Matthew Castel in order to implement the timeless investment principles they had always followed on behalf of their own families. The following transcript has been edited for space and clarity.

John Mihaljevic, MOI Global: It’s a great pleasure to welcome Peter Mantas, general partner of Logos LP based in Toronto, Canada. Peter, it’s great to have you here, and I look forward to learning about your investment approach. Perhaps we could start with a little background on yourself and the genesis of your firm.

Peter Mantas, Logos LP: I’m originally from Ottawa, Canada, and I attended business school at the University of Ottawa. I met my partner, who’s also a general partner, Matthew, at McGill where we did our postsecondary education. I went to McGill for law school, and he went to McGill as well.

I had done a lot of research – academic and general research – on how portfolio construction can optimize performance and on the multiple ways to value companies bottom-up. Matthew had experience inter-

nationally and expertise in global macro and behavioral economics. We combined that expertise and developed a unique approach to portfolio construction, which we tested as a beta prior to fund inception. Given the success, we launched Logos in March 2014.

Matt came up with the word “Logos.” At the time, he was reading Greek philosophy.

The word logos is Greek for “word” or “reason.” The idea of logos in Greek harks back to the 6th century when Heraclitus discerned the cosmic process was a logos, analogous to reasoning power in men. We thought it was a great name because we take an interdisciplinary outlook to value investing which allows us to find and value businesses using equal part logic and creativity.

MOI: You’ve been doing this for some years now, and I’d love to get a sense for how those years have gone, whether the initial impetus for launching it has played out as you expected. Where do you hope to take the firm over time?

Mantas: We’re long-term investors. The first five years have been good. We were fortunate to see a major drawdown in the fourth quarter of 2018, which would provide for excess returns for at least the short- to medium-term. Our compounded annual return is around 15%, and every year we try to push out a double-digit return for our

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limited partners. Our minimum goal is high double-digit returns over the long term.

MOI: Let’s talk a little about your investment approach. You alluded to the impetus for starting the firm. Is that still part of the approach?

Mantas: Yes. Our ideal investment universe is usually mid-cap to small-cap stocks with long secular growth stories and high returns on capital. However, we evaluate large-caps and mega-caps if we suspect a significant mismatch between value and price in the short- to medium-term. I typically start the process by generating ideas via value-based screeners that give us a list of investment ideas. Sometimes, as in August 2018, nothing comes up. Ultimately, we create a list of names to evaluate further in proxy statements and annual reports.

MOI: You are based in Canada. Does Canada figure prominently in your investment universe? Or do you tend to look elsewhere?

Mantas: The portfolio is about 65% U.S. and 35% Canadian. We typically invest in North America. We evaluate European and Asian potential opportunities as well. We do not have a bias toward Canadian equity.

Rather, we seek the best value and best companies that fit the profile of investments we seek.

MOI: Let’s talk a little more about the profile you seek. There’s a lot of different flavors of value investing, a wide spectrum.

Where would you put yourselves on that spectrum?

Mantas: More individual funds consider value investing by seeking companies with discounted cash flow, some apply a multiplebased approach, and others select investments based on earnings. We consider those factors, but for us the most important thing is a secular growth tailwind. If we find that, we favor stocks whose price is well below what we believe the company would be worth based on projected or current cash flows.

For example, we like Huntington Ingalls Industries (NYSE, HII), a 2011 Northrop Grumman spinoff. Huntington is the largest shipbuilder in the United States. This

company enjoys a huge backlog of $23 billion and a high return on capital. It sits on a lot of cash. The secular growth story was apparent in October 2018 when the U.S. Navy published a report proposing one of the largest investments in U.S. Navy ships and submarines since Reagan. There is a massive push for the buildup of these ships and submarines, which are needed given how much these ships have deteriorated or depreciated over time. The company is a consistent earner and generates tons of free cash.

HII also has an IT arm, which hasn’t been priced effectively. The IT arm provides IT cybersecurity, IT networking, IT consulting, and software. Also, the IT arm has served an acquisitive role. This is a company with long tailwinds, high return on capital, and excellent secular growth. In December of this past quarter, the stock sold off largely because of the prospect of trade wars. It was trading at 10x earnings, 10x cash flow, and less than 1x sales, which was well below multiples a normal defense stock would command with such a large backlog and a software business.

Its size is perfect, has the perfect secular growth story, and presents excellent valuation. We can buy and hold, waiting for the market to appreciate its value.

MOI: How do you come across an idea like this? Is that screening? Or have you had it on a watchlist for some time? Give us a sense of your idea generation process, please.

Mantas: Our universe is small to midcap stocks. We use value-based proprietary screens to create a list of candidates. Sometimes we find many prospective investments.

Sometimes we find none. Next, we develop a short list of companies requiring further valuation; these are the names we dive deep into. We study proxy reports, annual reports, and presentations. We call up management teams and eventually develop our watchlist.

Then we mark exact pricing thresholds and figure the percentage they represent in our portfolio construction thresholds. Once a stock hits our threshold, our price target, we take a position.

MOI: There’s a lot of talk of moats and competitive advantage. Let’s take Hunting-

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ton Ingalls as an example. How would you judge the moat of a company like that?

Mantas: It’s about the stickiness of the services and products. If anyone is going to be touching U.S. ships, it will be Huntington. It is the preferred vendor for the U.S. government. It has a long history of delivering projects. It provides other services to the U.S. government, too. Huntington has expertise in its field and expertise in stickiness.

With stickiness comes pricing power. Pricing power is not merely the power to increase prices. Pricing power includes understanding the business well, including controlling business costs. Huntington is an example of a business with a large moat because no one else will be able to touch U.S. ships. They’re a preferred vendor with the U.S. government.

There’s a lot of stickiness there. This creates a significant competitive advantage. Even though Huntington is only a $7 billion business, it has a wide moat.

MOI: How does the pricing dynamic work in a case like this? It seems on the one hand, as the dominant player, Huntington could raise prices. On the other hand, it has only one customer, the U.S. government; that single customer could push back. Help us to understand more about the pricing power and how the procurement process works.

Mantas: Pricing can go two ways, price increases and price decreases. Huntington can go to the U.S. government and say, “Look, the typical cost for this particular ship is $2 billion. We can do it for $1 billion or $900 million.” And because of its expertise, it has had a long track record of building ships for the U.S. government.

Because of its expertise, Huntington can reduce prices creating significant cash flow and profit. This, in turn, creates large shareholder returns. In this example, it would be difficult for a competitor to build ships at budgets that Huntington can use because it wouldn’t be economical. Given its expertise, Huntington can save the U.S. government a lot of money by building a lot of ships.

At the same time, Huntington also enjoys pricing power going upwards because of its

innovation in technology, software, simulation, and professional services. Huntington can add more value to a lot of the ships it builds and, therefore, add more pricing power to the deliverables it provides to the U.S. government.

MOI: Do they also build ships for U.S. allies? Is that a significant part of the business?

Mantas: The vast majority is U.S. government. Huntington also provides IT servicing and IT security to other multinationals like Boeing, ExxonMobil, or other companies that may have offshore oil sites like BP, but the vast majority is U.S. government contracting.

MOI: And are they the leader across all the various categories – let’s say aircraft carriers or destroyers?

Mantas: Yes, they are leaders in all categories, aircraft carriers, nuclear submarines, and destroyers.

IF WE FIND THAT [A SECULAR GROWTH TAILWIND], WE FAVOR STOCKS WHOSE PRICE IS WELL BELOW WHAT WE BELIEVE THE COMPANY WOULD BE WORTH BASED ON PROJECTED OR CURRENT CASH FLOWS.

Because of Huntington’s expertise creating the George H.W. Bush ship, the Gerald Ford, and several other high profile, large ship projects for the U.S. Navy, Huntington has a chance to solidify market share. Huntington is the company responsible for those large projects going forward.

MOI: Is this the kind of investment in which you buy at the right price and then

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hold for a long time? To what extent do you track things like the U.S. government budget and those kinds of developments to see whether your position makes sense?

Mantas: Yes, we look for a good entry point on price. We also monitor the secular story, in this case, government spending on outdated ships, to see if that thesis has changed. However, if we believe the story has not drastically changed and the market remains strong, we would buy a significant portion and hold. Because of the business profile, its return on capital, its size, and its story, few other businesses offer such a compelling story. If the position develops as a core position, we would intend to hold for a decade or more.

MOI: You mentioned it was a spinoff. Was that part of the attraction? Do you screen spinoffs or look at them as they come to the market?

other characteristics making it an attractive investment.

MOI: Maybe using Huntington as an example, help us understand how you think about position sizing and concentration in the portfolio.

Mantas: We structure our portfolio with several core positions. Peripheral positions surround the core. We hol d core positions for a long time, decades or many decades.

Huntington is an example in which we took a position because of its long secular tailwinds, the rarity of finding a company of that size, which is a mid-cap, its return on invested capital, and a fantastic management team. Huntington is one name that would qualify as a core, and it would represent a larger portion of the portfolio. Another core holding is Church & Dwight. Many people are familiar with its businesses, including Arm & Hammer baking soda and Trojan condoms. These names start as mid-caps for us with $6 to $9 billion market caps and which we believe can become $30 billion to $40 billion market caps and beyond. We try to build cores on profiles like these. The peripherals around the core are significantly mispriced. It could be a large-cap stock that is unfairly punished due to an earnings report. It could be secular headwinds.

Perhaps it’s been beaten too much. It could be a macroeconomic story. Those positions will be more short-term to medium-term.

Sixty-five percent of the portfolio is in our top ten names. Fifty-five percent of the portfolio is encompassed through the cores and 45% in the peripherals.

MOI: I’d love to hear a little more about how you view competitive advantage and what sources of competitive advantage you found to be the most durable. You talked about it with Huntington, but have you seen patterns that have worked particularly well in the past and that you tend to look for?

Mantas: We think price is powerful. Price is a consequence of a deeper competitive advantage in which we find a real necessity or inelasticity for that product or service.

For example, we love Church & Dwight. It competes with Tide. This is a company with

WE STRUCTURE OUR PORTFOLIO WITH SEVERAL CORE POSITIONS. PERIPHERAL POSITIONS SURROUND THE CORE. WE HOLD CORE POSITIONS FOR A LONG TIME, DECADES OR MANY DECADES.

Mantas: Spinoffs are interesting. We’re always interested in spinoffs mainly because spinoffs often offer value because current shareholders in the mothership are sometimes not interested in the spinoff.

Often, these spinoffs are truly uncovered because they’re not part of the greater business. We do evaluate spinoffs with some clarity and certainty. We have a dedicated eye on spinoffs, but it’s not the sole area we focus on. Huntington had many

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MOI: You talked about the management team at Church & Dwight as superb. Help us understand how you assess that.

Mantas: We look at management teams according to several characteristics, first of which is insider ownership. Second, does the management publish a fairly clean proxy statement? I don’t like to see companies with a lot of related party transactions. Is management transparent in its communication? Is it focused on total shareholder returns? These are the kinds of characteristics I like to see in our companies. In the case of Church & Dwight, its management team grew organically. Managers have a healthy insider ownership mentality. They’re transparent with their shareholders, focused on total shareholder returns, and patient when it comes to acquisitions. Their strategy is clear, and they understand their businesses well. With these kinds of management teams, I can sleep at

strong brand recognition, excellent margins, and a fantastic management team. Church & Dwight has positioned its products to a science. This is a company with significant pricing power because it dominates its categories.

Church & Dwight is in the right spaces with long secular tailwinds, and it enjoys significant market share and brand recognition.

Price will typically be the most durable competitive advantage because it impacts all levels of the business. It impacts top line growth, margins, and net profit. The companies that realize their price control can increase price without having significant capex investments.

These companies start to see their return on capital increase. These are the outperforming companies with strong moats.

MOI: How do you think through risks?

For instance, with Church & Dwight there’s a lot of talk about disruption in the consumer brand space because it’s easier to launch new brands or market them on Amazon or in various other ways. How do you think about that kind of long-term threat? How do you assess it?

Mantas: We see risk and prospective low returns as two sides of the same coin.

When we evaluate a business, we always look at potential downside threats to the company’s moat. In the case of Church & Dwight, it’s less exposed to a lot of the disruption competitors like Procter & Gamble face. Church & Dwight is in a unique position straddling personal care and healthcare. Because it dominates such niche brands or markets, there’s little private label exposure. Church & Dwight has a tremendous track record of growth through its e-commerce channel and through acquisitions. We’re less afraid of disruption from a brand perspective, but more concerned about the company getting ahead of itself with a bad acquisition. For any stock, we look at our impression of the business’s future. Is the story still intact? Can it maintain the return on invested capital it’s enjoyed for the last 20, 30 years? If the answer to that question is no, with or without some certainty, we see it as a risk investment and cannot make a purchase.

WE SEE RISK AND PROSPECTIVE LOW RETURNS AS TWO SIDES OF THE SAME COIN. WHEN WE EVALUATE A BUSINESS, WE ALWAYS LOOK AT POTENTIAL DOWNSIDE THREATS TO THE COMPANY’S MOAT.

night. We look for cultures like Church & Dwight’s.

MOI: When it comes to management incentives, do you have things you look for there either in terms of how the compensation is structured, or how much equity the management team owns?

Mantas: We do look for compensation, because it links to performance. Church & Dwight links performance to gross margin, which is a leading indicator of outper-

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Mantas: We typically don’t talk to CEOs. We find CEOs are great salesmen, so they can certainly pitch their stock. We like to evaluate businesses with a detached perspective in an impersonal way to avoid bias. Having said that, sometimes we seek dialogue with management teams of smaller companies, companies with significant insider ownership., or family-owned businesses where there’s not a lot of float. Sometimes we seek dialog if the company requires a little clarification on strategy. With respect to activist investing, it can be useful in creating greater shareholder value because there are many companies with terrible management teams.

However, we do not typically ride shotgun on such adventures. There are enough high-quality businesses to choose from. We’d rather build significant stakes in businesses with solid management teams than deal with factors outside our control.

MOI: How do you think about the art of valuing a business? What considerations do you make? Are some metrics more important than others in your valuation approach?

Mantas: Many value investors seem to overemphasize traditional metrics that might provide what a value investment ought to look like. We take the view that multiples or industry comparables need to be taken with a grain of salt. Although investing is highly quantitative, a portion of the analysis is qualitative and should assist in quantitative valuation. For example, if you take a high growth, mission critical enterprise software company, it will have a price-to-book that might be high even compared to other software companies. If you look at a utility company, if you look at price-to-book for example, it might be quite low. A utility company might be cheaper than a software company, or one software company might be more expensive than another. For utilities, we know book value. We see the plants, property and equipment, inventory, assets, and liabilities.

For a mission critical software company, some important factors do not appear on the balance sheet like knowledge and processes

formance for many companies. A recent academic paper revealed how gross margin can be the best indicator for total shareholder return. We favor fairly paid executive teams with an incentive structure linked to company performance.

MOI: Could you please talk about some CEOs whom you particularly admire, or are either invested alongside currently, or would like to be invested alo ngside at the right opportunity.

Mantas: I greatly admire Matt Farrell at Church & Dwight. Another is Stanley Ma at MTY Food Group. He’s CEO of a franchise operator. Olivier Filliol at MettlerToledo is another great CEO. Of course, I admire Warren Buffett at Berkshire Hathaway. From past CEOs, I admire Henry Singleton at Teledyne. He was reclusive, had decentralized operations, and repurchased shares like nobody else. Those are

… MULTIPLES OR INDUSTRY COMPARABLES NEED TO BE TAKEN WITH A GRAIN OF SALT. ALTHOUGH INVESTING IS HIGHLY QUANTITATIVE, A PORTION OF THE ANALYSIS IS QUALITATIVE AND SHOULD ASSIST IN QUANTITATIVE VALUATION.

the kinds of CEOs we admire from past and present.

MOI: Are there also a couple of approaches among value investors when it comes to talking to management teams? Some people like to avoid it completely to avoid bias, and others seek out the dialogue. What’s your take on that? Is engaging with management part of your process?

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created by investments in R&D and innovation. Although R&D, for example, might be an expensive income statement item, we know intuitively there’s lasting value on the balance sheet through knowledge transfer, innovation, and repeatable processes. For a particular software company, we can speak to the value of that knowledge or that R&D. Thinking critically about the qualitative aspects of the business, we might say it’s cheaper than other software companies with lower price-to-book values over the utility company. There’s a little about understanding the secular growth story for the business that is in this art of value investing.

We also like to merge the art of value investing with the quantitative aspect so we can eventually translate our findings into earnings and cash flow. Free cash flow is a major input to our calculations. Also, we need to understand the meaning of earnings and how they will look in the future. We’re interested in diving deep into those kinds of businesses. If businesses can grow free cash flow, we believe they can grow. If free cash flow becomes a greater percentage of sales while capex does not, then those are the kinds of businesses we are interested in.

MOI: Markets have cycles. Howard Marks’s new book talks about that. Help us understand to what extent you are fully invested versus having cash in the portfolio at different times. Do you vary the cash position consciously? How does that work?

Mantas: We always remain fully invested, especially with our core positions.

At times we hold more or less cash. For example, in August of 2018 we held a larger cash position than usual. We capitalized because we used that cash to make strategic purchases, particularly in December of 2018. We evaluate market cycles, compare our interpretations with the cash balance, and decide whether to change our cash balance. Give or take, we’re always effectively fully invested, especially within our core positions.

MOI: You talked about concentration in the portfolio. Anything else you keep in

mind on that front? What about industries?

Do you prefer certain industries? To what extent do you keep the portfolio diversified across sectors?

Mantas: The industry and sector bear on an evaluation of how much of the portfolio we devote to these companies. Consider CGI, for example, a company with an addressable market in the trillions, worth $23 billion, and with a huge backlog. CGI will be a $100 billion company in the next decade. Sometimes we look at size like this and at the market and decide we could take a larger position in a company like this.

If you take a company like Huntington, by our estimates, the company is north of $20 billion to $21 billion. We will have a somewhat larger position in the fund with a position like this. Church & Dwight has a massive market and markets that haven’t

WE EVALUATE MARKET CYCLES, COMPARE OUR INTERPRETATIONS WITH THE CASH BALANCE, AND DECIDE WHETHER TO CHANGE OUR CASH BALANCE. GIVE OR TAKE, WE’RE ALWAYS EFFECTIVELY FULLY INVESTED, ESPECIALLY WITHIN OUR CORE POSITIONS.

been fully priced in yet. Not many people know that Church & Dwight has a large animal business. Humans consume resources faster than they replace them, so animal productivity will be a real story for the population over the next 30 or 40 years. That is an example of a business where not only do we have the consumer in the trillions of

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dollars, but we also have markets with large growth attached to it. We do look at the market and industry they operate in as well as their positioning and strategy. Those all come into play when looking at the kind of concentration we want for any stock.

MOI: If I can come back to CGI for a moment, you mentioned the recently $23 billion market cap, but it could be up to $100 billion over time. How do you think about that opportunity? Why do you believe CGI will continue to outperform?

Mantas: CGI enjoys the luxury of operating an effective oligopoly. Not only does it consult for large governments and multinationals, but it develops software. Its largest competitor is Accenture, which already is in the $100 billion business plus. CGI has an ever-growing backlog of contracts for its services and technology, and its market is north of $1 trillion. It has captured only a small

an interesting industry. We can qualitatively analyze the business and see its path to $100 billion or more in market cap.

MOI: What would you consider the biggest mistake that tends to keep investors from reaching their goals?

Mantas: Their biggest mistake is to fail to understand themselves intimately. They fail when they are unaware of their own human nature, how their emotions bear on their decisions, their individual ticks, their insecurities, and their destructive patterns. We spend a lot of time living on the surface, reacting emotionally. It’s what people say and do, and we’re drawn into action to stimulate our own human tendencies for greed, instant gratification, and the pursuit of pleasure. But refusing to come to terms with that basic human nature means investors can doom themselves to patterns beyond their control and to feelings of confusion and helplessness. Negative investment outcomes tend to follow that. Avoiding investment mistakes means developing selfknowledge and self-awareness with discipline to make prudent decisions in the long run.

MOI: Are there books you find particularly illuminating and which you would recommend for insight into the art of investing?

Mantas: I like Thomas Phelps’s 1972 original copy of “100 to 1 in the Stock Market: A Distinguished Security Analyst Tells How to Make More of Your Investment Opportunities.” It’s a bit of a lighter read. The book is about bagger stocks, companies in which a $10,000 investment grows to $1 million. The original 1972 book is a better read than a recent rewrite published maybe five years ago. The author dives deep into what it takes to have bagger-like returns. I’ve learned through the art of value investing how people underestimate patience to get those kinds of returns.

I don’t mean just one or two or five years.

I mean waiting a long time. An example is Amazon. If you bought Amazon in 2000, you endured 10 years of terrible performance. It became a mega cap only recently.

The book has many examples about extreme outperformance and how, for certain posi-

AVOIDING INVESTMENT MISTAKES MEANS DEVELOPING SELFKNOWLEDGE AND SELF-AWARENESS WITH DISCIPLINE TO MAKE PRUDENT DECISIONS IN THE LONG RUN.

percentage of the total addressable market.

The growth rate for IT services is calculable and well known. One can see how the company, over the next ten to twenty years, can reach $100 billion. Given its high return on capital and its shareholder-friendly policy, we can see how the value of the company can support that valuation. CGI exemplifies a company providing a strong secular growth story and excellent tailwinds. CGI presents

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tions, some investors had to wait a decade or more to see the outperformance. The book opened my eyes to understanding how patience is truly one of the greatest assets an investor can have over the long run.

MOI: I’d love to understand more about your firm and your long-term outlook on your website. I found it interesting when you say you’re focused on intergenerational wealth. Tell us about the kinds of partners or investors you look for and what role you hope to play in their financial lives.

Mantas: That’s a great question. We don’t focus on having good years for a couple of years. We focus on having good decades. We’re truly long-term investors. Quite frankly, it’s the only way we can ever see a true snowball effect for ourselves and for our limited partners. Typically, Logos LP investors seek high rate compounding for a long time. We’re not interested in day-to-day trading. We’re not interested in high turnover or in picking a particular theme for any given year and rotating in and out of the theme. Rather, we look for businesses in which we can buy meaningful stakes and then compound at high rates over decades. Many of our investors have an intergenerational wealth goal, a focus on longterm family wealth creation. It’s for creating

something greater than themselves. To do that effectively, one needs to have the snowball rolling and rolling for a long time.

MOI: To understand a little better how you and Matthew divvy up responsibilities, do you both research companies? How does the process of choosing investments work?

Mantas: I do a lot of the bottom-up fundamental analysis and portfolio management. Matthew uses his expertise and experience in international development, international economics, global macro, and behavioral economics. I get many research supports from him pertaining to market cycles, data from Europe, and what the recent inversion might mean for us. We divide the investing story two ways. I might screen for value or find a truly undervalued company.

But the timing might be wrong, or it might be in the wrong sector given the macroeconomic environment or the particular cycle.

Of course, we talk about every investment we make. We’re sounding boards for each other with respect to our own research.

MOI: Peter, this has been great. I’ve enjoyed learning what you are up to and your investment approach. Thank you so much for sharing your philosophy and for discussing those case studies you mentioned. That was very instructive as well.

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SAHM ADRANGI CHIEF INVESTMENT OFFICER, KERRISDALE CAPITAL MANAGEMENT New York

Private investment manager / Sahm Adrangi’s firm is a research-oriented investment operation focused on long-term value investments and event-driven special situations.

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ahm Adrangi is the Founder and Chief Investment Officer of Kerrisdale Capital Management, where he has been involved in all aspects of the firm’s development since its founding in 2009. He started his financial career in credit – performing high-yield and leveraged loan debt financings at Deutsche Bank, as well as advising creditor committees in bankruptcy and out-of-court restructuring situations at Chanin Capital Partners. Subsequent to his investment banking experience, Sahm spent several years at a multi-billion-dollar distressed debt hedge fund, Longacre Management. He holds a Bachelor of Arts in Economics from Yale University. Sahm has been a speaker at numerous conferences and has been featured in several major publications.

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JEFF AUXIER PRESIDENT AND CEO, AUXIER ASSET MANAGEMENT Lake Oswego, Oregon

Seasoned investment manager / The cornerstone of the Auxier Focus Fund is respect for the power of compounding

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eff Auxier founded and manages the Auxier Focus Fund. Prior to that, he was Sr. Portfolio Manager for Smith Barney. At age 11, Jeff mowed the lawn of Robert Pamplin Senior, the former long-time CEO of Georgia Pacific and recipient of the “World’s Top CEO Award”.

Mr. Pamplin tutored Jeff on living a life of ethics. After graduating from the University of Oregon in 1981 with a degree in Finance and an emphasis on accounting, Jeff reached out to some of his investment heroes, long before they became today’s financial rock stars. Warren Buffett graciously took several of Jeff’s calls and offered advice that guides him to this day.

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BOGUMIL BARANOWSKI FOUNDING PARTNER, SICART ASSOCIATES New York

Builder of intergenerational wealth / As acclaimed author and co-founder of Sicart Associates, Bogumil follows a value-oriented approach to preserving and growing wealth over the long term

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ogumil Baranowski is a founding partner of Sicart Associates, a New York City based boutique investment firm catering to families and entrepreneurs on both sides of the Atlantic and the Pacific. He has 15 years of investment experience, and holds a Master’s degree in Finance and Strategy from Institut d’Etudes Politiques de Paris (Sciences Po), and a Master’s in Finance and Banking from Warsaw School of Economics. He is the author of Outsmarting the Crowd – A Value Investor’s Guide to Starting, Building and Keeping a Family Fortune (2015), and Money, Life, Family: My Handbook: My complete collection of principles on investing, finding work & life balance, and preserving family wealth (2019).

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DAVE BARR PRESIDENT, CEO AND PORTFOLIO MANAGER, PENDERFUND CAPITAL MANAGEMENT Vancouver

Canadian value investing thought leader / As head of Pender, David has built an industry-leading team while continuing to uncover catalyst-driven opportunities in the Canadian small-cap space

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avid Barr is the President and CEO of Pender. He is also the Portfolio Manager of the award-winning Pender Value Fund and Pender Small Cap Opportunities Fund. He began his investing career in 2000, initially working in private equity. He joined Pender in 2003, was appointed Chief Investment Officer in 2007 before becoming President and CEO of Pender in 2016. Mr. Barr holds an MBA from the Schulich School of Business and earned his Chartered Financial Analyst designation in 2003. Mr. Barr looks for value in unpopular places to find high quality businesses at a price that includes a “margin-of-safety”.

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JOHN BARR PORTFOLIO MANAGER, NEEDHAM FUNDS New York

Experienced, intelligent investor / John loves the challenge of identifying businesses with compounding characteristics and getting to know them over time.

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ohn Barr is Co-Portfolio Manager of the Needham Growth Fund and Portfolio Manager of the Needham Aggressive Growth Fund. John started on Wall Street in 1995 at Needham as a sell-side analyst following technical software companies. He rejoined Needham in 2009 to co-manage the Needham Mutual Funds. From 2000 – 2002, John was a senior analyst at Robertson Stephens following semiconductor technology companies. In 2002, John joined Buckingham Capital Management, serving as a portfolio manager and analyst. From 2009 – 2017, John was on the board of directors of Coventor, Inc. Before Wall Street, John spent 14 years in the electronic design automation industry. He is a graduate of Colgate University and Harvard Business School.

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CHRISTIAN BILLINGER INVESTOR, BILLINGER Fร RVALTNING Karlstad, Sweden

Family asset manager / Patient capital provides Christian with the proper environment to pursue his strategy of identifying long term compounders.

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hristian Billinger is an Investor at Billinger Fรถrvaltning, a family-held investment company with no external capital. Christian focuses first on the qualities of robustness and resilience which limit downside potential before determining the mix of returns on capital and scope for reinvestment opportunity that accounts for the upside. Often, these factors overlap with family-controlled management teams that more conservatively finance their operations. Prior to Billinger Fรถrvaltning, Christian worked as a European Equity Analyst for various investments funds. Before that, Christian was an associate at PwC. He holds an MS in Accounting and Finance from The London School of Economics as well as Karlstad University. He is also a CFA charterholder.

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ERIC BOROIAN ANALYST AND PORTFOLIO MANAGER, MONTSEGUR FINANCE Paris

Fundamental investor / Eric has extensive experience in concentrated investing across global markets.

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ric Boroian is an analyst and portfolio manager at Montsegur Finance. Previously, he served as a portfolio manager with Focus Asset Managers. He graduated from the London School of Economics with a graduate degree in Sociology and Quantitative Research Methods, and from Imperial College London, with an MBA in Finance. He started his career as a business analyst at Vivendi Universal, and then spent time as an equity research analyst at CA Cheuvreux, with a focus on European Consumer Staples. Eric also has investing experience in concentrated portfolios of European and US equities.

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PATRICK BRENNAN PORTFOLIO MANAGER, BRENNAN ASSET MANAGEMENT San Francisco Bay Area

Concentrated value investor / Brennan specializes in finding mispriced opportunities in the media/telecom, financial service and consumer discretionary sectors.

P

atrick Brennan is the founder and portfolio manager of Brennan Asset Management, based in Napa, CA, which utilizes a concentrated value investing strategy. Prior to founding Brennan Asset Management, Patrick managed portfolios and led research efforts at two value investing firms in California: Hutchinson Capital Management and RBO & Co. Previously, Patrick worked at Mark Boyar & Company, where he led the firm’s research team and helped manage $800 million of assets. He also worked for six years in investment banking and equity research with Deutsche Bank, CIBC World Markets and William Blair & Company. Patrick graduated summa cum laude from the University of Notre Dame with a degree in economics and was inducted into Phi Beta Kappa.

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THOMAS BUSHEY MANAGING PARTNER AND PORTFOLIO MANAGER, SUNDERLAND CAPITAL PARTNERS Boston

Alternative asset manager / Thomas Bushey has over fifteen years of experience managing and investing capital.

T

homas Bushey is the Founder and CIO at Sunderland Capital Partners. Prior to founding Sunderland, he was a portfolio manager at Blackrock. Prior to Blackrock, Tom was a Senior Analyst for Mayo Capital Partners. Before that, he served a Senior Analyst at Millennium Partners, where he was part of a global industrial investment team. Tom began his career as an analyst for Credit Suisse First Boston (“CSFB�) and later moved to HCI Equity Partners (Thayer Capital). His experience includes analyzing mergers, acquisitions, leveraged buyouts, divestitures, takeover defenses, restructurings, as well as managing private equity funds focused on industrial products and services. Tom has a BS in Economics from the Wharton School of the University of Pennsylvania.

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FRANCISCO CARRILLO CHIEF INVESTMENT OFFICER, MEXICO VALUE PARTNERS Mexico City

Mexico-based value investor / For more than two decades, Francisco has been analyzing securities around the world with the objective of finding value in quality companies.

F

rancisco Carrillo began his investment career some 20 years ago as an analyst at GBM Grupo Bursátil Mexicano. His tenure at GBM lasted close to 10 years and he held various responsibilities during that time, culminating with his participation in the firm’s investment committee. After GBM, Carrillo co-founded Sabino Capital, a Mexico-based investment partnership. Later, he briefly worked at Bestinver, a renowned Spanish investment advisor. In 2012 he and two other partners founded Mexico Value Partners, a Mexico-based investment partnership where he currently serves as Chief Investment Officer.

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SIMON CAUFIELD MANAGING DIRECTOR, SIM LIMITED London

Investor, consultant, entrepreneur / Simon is a value-oriented investment manager with a diverse business background.

S

imon Caufield is Managing Director at SIM Limited, a UK-based investment firm.

Simon founded the firm in 2007 after selling his stake in Nomis Solutions, a businessto-business enterprise software company he founded in 2002. His circle of competence is deep value, cyclicals and deceptively cheap compounders amongst the industrial and consumer discretionary sectors. Previously, Simon was a management consultant for more than a decade, including at Mercer Management Consulting. Simon has an MA in Engineering from Cambridge University and an MBA in strategy, fianance and markteting from London Business School.

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EDWARD CHANG PORTFOLIO MANAGER, PLEDGE CAPITAL New York

Skilled analyst and investor / Edward is a portfolio manager focused on primary research and taking concentrated positions in the public markets.

E

dward Chang is the founder and Portfolio Manager at Pledge Capital. Before founding Pledge Capital in 2016, he worked on the sell side at UBS Equity Research covering consumer retail companies. Edward had previous work experience covering a wide breadth of companies on the buy-side; including stints at Deloitte and SYW Capital in New York. He is a graduate of New York University Leonard N. Stern School of Business with a Bachelor’s degree in Finance & Accounting. He also completed a Master’s degree in accounting during the same time. Edward volunteers at the Tzu Chi Foundation.

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SER JING CHONG PORTFOLIO MANAGER AND CO-FOUNDER, COMPOUNDER FUND, GALILEE INVESTMENT MANAGEMENT Singapore

Fund manager, writer, analyst / Ser Jing is an investor with a passion for investor-education.

S

er Jing Chong graduated in 2012 from the National University of Singapore’s Engineering Science Programme. From January 2013 to October 2019, Ser Jing served in The Motley Fool Singapore as a writer as well as a co-leader of the investing team. One of his career highlights with Fool Singapore was to help its flagship investment newsletter, Stock Advisor Gold, outperform a global stock market benchmark by nearly 2x over a 3.5 year period. In mid-2020, he co-founded and launched Compounder Fund at Galilee Investment Management, a long-term focused global equities investment fund. Ser Jing also maintains a blog, The Good Investors, with his co-founder.

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PAOLO CIPRIANI INVESTOR, Italy

Investor / Paolo invests in owner managed businesses with an economic moat, cash generation, consistent growth, and sustainable returns on equity.

P

aolo Cipriani is an investor with nine years of investment experience. He holds a master’s degree in Accounting from Florence University. Since 2017 he has been building a track record with his long-only equity approach, with a focus on Europe, USA and UK. His investment strategy is based on a selection of high-quality businesses led by entrepreneurial business leaders. His expertise extends on sub-sectors with growth potential such as software vendors, IT resellers, publishers, system integrators, cybersecurity, digital communication, digital payments, diagnostic, electricity and renewable energy.

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IAN CLARK MANAGING PARTNER, DICHOTOMY CAPITAL New York

Power industry investor / Dichotomy is a power focused investment manager that looks for opportunistic returns in the public and private markets.

I

an Clark is the Managing Member of Dichotomy Capital. Ian leads the public security selection process for Dichotomy Partners, a long/short hedge fund that primarily invests in utilities, power companies, and the power industry daisy chain. He is also the CEO of Dichotomy Power LLC, an entity that owns and operates renewable energy assets and has a dedicated retail energy arm. Ian is a regular contributor to state level energy policy and is active in numerous energy trade groups. Prior to founding Dichotomy, he worked as an analyst for a hedge fund. He received his M.S. in Chemistry from the University of Oregon. Ian’s research has been showcased in numerous publications.

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CHRIS COLVIN FOUNDER AND PORTFOLIO MANAGER, BREACH INLET CAPITAL Dallas, Texas

Small-cap fund manager / Chris is an investment manager who runs a concentrated portfolio of small-caps undergoing transformations.

C

hris Colvin, CFA, is the Founder of Breach Inlet Capital. Prior to Breach Inlet, he was the Portfolio Manager at Freeman Group (a family office), where he launched and managed a concentrated public markets portfolio. He also led diligence and was a board member for private equity investments. Before Freeman, he was a Senior Analyst at Highland Capital Management, where he managed a portfolio of distressed credits and a long/short equity fund. Chris began his career as an investment banking analyst at Stephens, where he also helped evaluate private equity investments. He graduated from Wake Forest University with a BS in Business.

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JAMES DAVOLOS VICE PRESIDENT & PORTFOLIO MANAGER, HORIZON KINETICS New York

Experienced investment manager / James is responsible for a variety of equity strategies and investment offerings at Horizon Kinetics.

J

ames Davolos is a Portfolio Manager at Horizon Kinetics. He serves as Co-Portfolio Manager to many of the funds which are among a series of Kinetics Mutual Funds, Inc. He is a member of the Firm’s Investment Committee and Research Team, and is actively involved in research, valuation and portfolio allocation for many of the Firm’s high conviction investments. James joined the Firm in 2005 as a research analyst. He earned his undergraduate degree (B.B.A.) from Loyola University of Maryland in 2005, and his Master’s in Business Administrator (M.B.A.) from New York University in 2016.

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ERIC DELAMARTER MANAGING MEMBER, HALF MOON CAPITAL New York

Focused on special situations and complex opportunities / Half Moon applies a generalist strategy to investing; identifying opportunities across various sectors and markets with bottom up analysis.

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ric DeLamarter is the PM of Half Moon Capital— a research intensive, deep valueoriented, long/ short partnership which invests across various sectors and markets with a focus on small-mid cap companies and special situations. Prior to founding Half Moon, Eric was at Stelliam Investment Management, a value-oriented hedge fund in New York, an associate at Lineage Capital, LLC, a middle-market private equity fund and an investment banking analyst at RBC Capital Markets. Eric holds an MBA from The Heilbrunn Center for Graham & Dodd Investing at Columbia Business School, with a concentration in applied value investing and a BA from the University of Michigan.

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STEPHEN DODSON PORTFOLIO MANAGER, BRETTON FUND San Francisco

Mutual fund manager / MOI Global is grateful to have Steve back with us again to share his wisdom and insights.

S

tephen Dodson founded the Bretton Fund in 2010 and serves as its president and portfolio manager. Prior to founding Bretton, Stephen was with Parnassus Investments, a San Francisco–based investment manager. Stephen was with Parnassus from 2002 to 2008 and served in a number of areas within the firm, including portfolio manager and president.

In 2008, Institutional Investor News named him one of the 20 Rising Stars of Mutual Funds.

Prior to Parnassus, he worked for the venture capital group of Advent International, a private equity firm, and was an investment banker for Morgan Stanley in New York and Menlo Park.

He holds a BS in business administration from the University of California, Berkeley.

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JAVIER ECHEVARRIA CHIEF INVESTMENT OFFICER, INVEXCEL PATRIMONIO Madrid

Value-oriented wealth manager / Javier has substantial experience directing the management of investment accounts from individuals and families.

J

avier Echevarria is the Founding Partner and serves as the CIO of Invexcel Patrimonios.

He has extensive experience in fundamental analysis following a value investing approach as well as wealth management. He worked in Bestinver’s sales team from 2007-2009.

He coordinated Project Anatha (schooling and protection of children from vulnerable populations) in Cambodia in 2009. He joined Excel Corporación as Markets Analyst in 2009 and Invexcel Patrimonio in 2010. He holds a Degree in Law from the Universidad Complutense de Madrid and a Master’s Degree in Stocks and Financial Markets from Instituto de Estudios Bursátiles.

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AARON EDELHEIT CHIEF EXECUTIVE OFFICER, MINDSET CAPITAL Santa Barbara, California

Intelligent investor, volunteer / Mindset Capital believes constant improvement, curiosity, and overcoming challenges are the long term attributes to success.

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aron M. Edelheit is the CEO and Founder of Mindset Capital, a private investment firm. In his previous role as CEO of The American Home, he founded and managed a company that owned 2,500 single family rental homes and was sold in April 2015 to a publicly traded REIT. Prior to that, Aaron founded and ran Sabre Value Management. He currently serves on the board of the Moishe House Foundation and is a member of Social Venture Partners in Santa Barbara, working on homelessness. Previously he served on the board of the Global Village Project, a non-profit school for refugee girls in Atlanta. Past volunteer work also includes mentoring and volunteering at Children’s Healthcare of Atlanta.

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MESUT ELLIALTIOGLU CHIEF INVESTMENT OFFICER, TALAS TURKEY VALUE FUND Istanbul, Turkey

Emerging markets investor / Mesut is an investment manager specializing in global emerging market opportunities; particularly in Turkey.

M

esut Ellialtioglu, Investment Officer of Talas Turkey Value Fund, has 23 years of Turkey focused equity research and fund management experience and focuses on value investing opportunities in the Turkish equity market. Prior to forming Talas Capital with Matthew Peterson, Mesut worked with Bankers Trust Company as an associate, Korfez Securities as Co-Head of Research, UB Ulusal Securities as Managing Director for research and asset management, Kent Securities as Head of Asset Management, and ABN AMRO Asset Management Turkey as Chief Investment Officer. Mesut graduated with BS in Economics degree from the Wharton School of Business of the University of Pennsylvania in 1993.

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FRANK FISCHER CEO & CIO, SHAREHOLDER VALUE MANAGEMENT Frankfurt Rhine-Main Metropolitan Area

Investing in value / Shareholder Value Management AG is an ownermanaged Frankfurt investment specialist with a focus on value stocks.

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rank Fischer is the CEO and CIO of Shareholder Value Management AG. Frank Fischer is also a board member of Shareholder Value Beteiligungen AG. Until the end of 2005, Frank was managing director of Standard & Poor’s Fund Services (formerly Micropal GmbH) and was responsible for investment fund information and ratings. After completing his training as a banker at the Hessische Landesbank, he completed a degree in business administration at the University of Frankfurt with a degree in business administration. He is the founder and director of the non-profit foundation Starke Lunge.

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JAMES FLETCHER PORTFOLIO MANAGER, APG ASSET MANAGEMENT Hong Kong

EM small and midcap investor / James has extensive experience investing in emerging markets around the globe.

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ames Fletcher is a portfolio manager with over sixteen years of equity research experience. He is currently Director and Senior Portfolio Manager of the EM SMIDcap fund at APG Asset Management, where he implements a concentrated, high-conviction investment approach. James earned a B.S. in Finance from Brigham Young University, where he graduated summa cum laude and with University Honors. He is a CFA charterholder. He is also the founder of Young Investors Society (www.yis.org), a non-profit organization that teaches financial literacy and investing concepts to high school students across the world.

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HARRY FRASER PARTNER AND PORTFOLIO MANAGER, OLDFIELD PARTNERS London

Value investment boutique manager / Capturing the small cap premium through a classic value based approach.

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arry Fraser is Partner and Portfolio Manager of the Global Smaller Companies Strategy at Oldfield Partners, which he joined in August 2011. Oldfield’s culture is investment-led and summed up in a few words: collegiate, supportive, founded on intellectual curiosity and focussed on long term results .Harry was previously employed by Herald Investment Management as a research analyst covering the media sector for a total of five years. He graduated from Newcastle University. He manages global smaller companies portfolios and contributes to the overall investment selection.

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ALEX GATES DIRECTOR OF RESEARCH, CLAYTON PARTNERS Berkeley, CA

Focused on long-term value creation / Alex leads Clayton’s efforts to find compelling investment opportunities in sustainable businesses which have a positive impact on climate change.

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lex Gates is the Director of Research at Clayton Partners, an opportunistic value investment firm taking a private equity approach to investing in the public markets. Clayton manages a private investment partnership and individual separate accounts. The current focus of Clayton is on investments in renewable energy, bio-fuels, recycling and water infrastructure. Alex holds a Masters Degree in Business Economics from the University of California at Santa Barbara. Prior to his graduate education, he completed a dual major BS in Economics and Statistics from Cal Poly State University.

At both institutions, Alex concentrated in finance and economic modeling. He earned the Chartered Financial Analyst designation in 2015.

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STEVE GORELIK PORTFOLIO MANAGER, FIREBIRD MANAGEMENT United Kingdom

Global value investor / Steve has over ten years of private and public equity experience in North American and Eastern European markets.

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teve Gorelik is Head of Research at Firebird Management, Lead Fund Manager of Firebird U.S. Value Fund, and portfolio manager of Firebird’s Eastern Europe and Russia Funds. He joined Firebird in 2005 from Columbia University Graduate School of Business while completing education from a highly selective Value Investing Program. Prior to business school, Steve was an operational strategy consultant at Deloitte working with companies in various industries including banking, healthcare, and retail. He holds a BS degree from Carnegie Mellon University, a membership in Beta Gamma Sigma honor society, and is a CFA charterholder. Steve serves on the boards of Georgia Beverage Holdings (Georgia), Arco Vara (Estonia), and Pharmsynthez (Russia). He speaks Russian, English and his native Belarussian.

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BRAD HATHAWAY MANAGING PARTNER, FAR VIEW CAPITAL MANAGEMENT Aspen, Colorado

Long-term value and special situation investor / Far View Capital Management seeks out investments with advantageous structural or behavioral anomalies.

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rad Hathaway is the Managing Partner of Far View Capital Management. Before founding Far View Capital Management in 2011, Mr. Hathaway worked for four years at J. Goldman & Company, a New York City-based hedge fund. At J. Goldman, Mr. Hathaway worked as an analyst and a portfolio manager on the firm’s value team. His role there included sourcing and analyzing investment opportunities and managing a portfolio comprised of global securities from multiple asset classes with a focus on US publicly-traded equities. Prior to J. Goldman, Mr. Hathaway worked for three years as an analyst at Tocqueville Asset Management. Mr. Hathaway graduated with a B.A. in Political Science from Yale University.

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JOHN HELDMAN PORTFOLIO MANAGER, TRIAD INVESTMENT MANAGEMENT Orange County, California

Experienced individual & institutional asset manager / Triad is an SECregistered and portfolio manager-owned investment management firm serving individual and institutional investors.

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ohn Heldman has more than three decade of investment management experience. Prior to founding Triad, John was a Senior Vice President and Portfolio Manager with Neuberger Berman. John has also managed institutional and individual investment portfolios for Deutsche Bank, Scudder Investments and Bank of America, including managing equity funds and serving on the Equity Strategy Committee. He obtained his Bachelor of Science degree in Finance and Master of Business Administration from California State University, Long Beach. John is a CFA charterholder, and a member of CFA Institute and CFA Society Orange County.

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BRIAN HENNESSEY PORTFOLIO MANAGER, ALPINE WOODS CAPITAL New York

Momentum-oriented hedge fund manager / Brian runs a US-centric, longbiased hedge fund; hunting for emerging tech disruptors and off-the-radar innovators.

B

rian Hennessey began his career in high yield fixed income research at Putnam Investments. He then climbed the quality spectrum to investment grade fixed income at Partner Re Asset Management. After that, he gained experience in event driven, risk arbitrage and distressed hedge fund strategies at Tribeca Global Management (a unit of Citi Alternative Investments), and Litespeed Partners. Since 2008, he has been at Westchester-based asset management firm Alpine Woods Capital Investors, currently as Co-Chief Investment Officer and manager of several long biased hedge funds focused on growth-oriented “deep moat� companies.

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JOHN HUBER MANAGING PARTNER AND PORTFOLIO MANAGER, SABER CAPITAL MANAGEMENT Fuquay-Varina, North Carolina

Running a Buffett-style partnership / John embraces independent thinking, concentrating in his best ideas, and a commitment to aligning interests with his clients.

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ohn Huber is the Managing Partner and Portfolio Manager of Saber Capital Management, LLC. Saber manages Saber Investment Fund, LP, an investment partnership modeled after the original Buffett partnerships, meaning that the fund has no management fee, and only charges a performance allocation on profits that exceed a 6% compounding hurdle.

John focuses on identifying long-term concentrated investments in undervalued companies.

He and his family have the vast majority of their own net worth invested right alongside Saber investors. John writes about his investment approach on his website under Saber Notes (previously Base Hit Investing). Prior to founding Saber, John worked as a real estate investor.

He attended North Carolina State University.

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DAVID HUTCHISON PORTFOLIO MANAGER, TRIAD INVESTMENT MANAGEMENT Newport Beach, California

Client-focused asset manager / Dave helps his clients grow their net worth over time in a way consistent with their values.

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ave has more than two decades of experience in investment management; having worked in the industry since 1995. Prior to joining Triad, he served as Investment Strategist for Chamberlain Group, directing investment manager research. Dave also founded and managed Hutchison Capital, a registered investment advisor. He holds a Bachelor’s degree in Political Science from Macalester College and a Master of Business Administration from the University of Southern California’s Marshall School of Business. Dave is a CFA charterholder, and a member of CFA Institute and CFA Society Orange County.

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NAVEEN JEEREDDI CHIEF EXECUTIVE OFFICER, JEEREDDI PARTNERS Los Angeles

Intelligent investor / Naveen Jeereddi has over two decades of value-oriented experience financing, analyzing, and investing in public and private companies.

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aveen Jeereddi is CEO and portfolio manager of Jeereddi Investments LP. Naveen has extensive investing, portfolio management, and risk management experience. He has served in value investment roles at Donaldson, Lufkin & Jenrette, Onex Corporation, The Baupost Group, and Tala Investments LP. He currently serves on the boards of directors of Chandler Global PTE Ltd, XPRS Capital LLC, iDream Media Inc., Basket Savings Inc., and the Webb Schools of California. He earned an MBA with distinction from the Harvard Business School and a BBA with high distinction from the University of Michigan.

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CHRIS KARLIN CHIEF INVESTMENT OFFICER, AQUITANIA CAPITAL MANAGEMENT Austin, Texas

Managing a global value investment firm / Chris seeks to maximize risk-adjusted returns with a fundamental research discipline, private equity valuation methodology, and an event-oriented perspective.

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hristopher Karlin has been in the investment business since 1991 and founded Aquitania Capital Management in 2012. Prior to founding Aquitania Capital Management in 2012, Christopher held positions as a Research Analyst and Portfolio Manager at First Pacific Advisors, Kestrel Investment Management and Fairview Capital Investment Management.

Christopher interned with Farallon Capital Management while pursuing his MBA. He began his career with Wells Fargo Nikko Investment Advisors which later became a part of Blackrock. Christopher received his BBA from the University of Wisconsin in 1990 his MBA from Yale University in 1998 and has held the CFA designation since 1994.

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ASHISH KILA DIRECTOR, PERFECT GROUP New Delhi, India

Delhi-based investor / Perfect Group of Companies is the management think tank of business interests across a spectrum of services.

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shish Kila is Director at Perfect Group. Ashish has previously worked with leading investment banks like Goldman Sachs & Morgan Stanley in their equity research divisions. He looks after the strategic functions of the group and manages the family office fund. Over the years, he has conducted seminars on value investing, leadership, productivity and startups across many institutions and forums. Ashish & his family undertake social initiatives via the group’s NGO - Perfect Foundation which manages two projects under the aegis of Bhaorao Deoras Sewa Nyas, feeding 2000 people every day free of cost & managing the 300-bed patient attendant facility at AIIMS Trauma Centre. He is rank holder CA and has an MBA from MDI Gurgaon.

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MIKE KRUGER MANAGING PARTNER, MPK PARTNERS New York

Seasoned investor / Mike is a returning contributor of ideas and insights to the MOI Global community.

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ike Kruger’s first investment experience was watching his shares of Berkshire Hathaway get cut in half during the tech-mania of the late 1990’s. However, he didn’t panic and today he manages a global focused value portfolio of equities and distressed debt in New York City. He previously worked as an equity and credit analyst at Promethean Asset Management in NYC. Prior to that, he worked as a high-yield credit analyst at Liberty Mutual in Boston. He holds a Bachelor’s degree from the College of Arts and Sciences at Cornell University.

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CLEMENT LOH INVESTMENT MANAGER, LION ROCK PARTNERS Toronto and Hong Kong

Family fund manager / Clement is an experienced investor based in Toronto and Hong Kong with background in healthcare and finance.

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lement Loh is the Investment Manager of Lion Rock Partners, a private family fund based in Hong Kong. The fund applies the principles of value investing to seek out companies with competitive advantages selling at a reasonable price with a focus on emerging Asian markets and smaller companies. Clement holds a master’s degree in business administration from the University of Toronto and a degree in pharmacy. Prior to entering the investment profession, Clement worked in the pharmaceutical industry and is a non-practicing pharmacist. His interests include economics, strategy, science, education and history.

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KEN MAJMUDAR PORTFOLIO MANAGER AND MANAGING PARTNER, RIDGEWOOD INVESTMENTS Short Hills, New Jersey

Client focused investment advisor / Drawing upon his professional experience and investing acumen, Ken has built a successful investment advisory firm.

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aushal “Ken” Majmudar, CFA founded Ridgewood Investments in 2002 and serves as CIO with a primary focus on managing value Investing based strategies. Ken graduated with honors from the Harvard Law School in 1994 after being an honors graduate of Columbia University in 1991 with a bachelor’s degree in Computer Science. Prior to founding Ridgewood Investments, Ken worked for seven years on Wall Street as an investment banker at Merrill Lynch and Lehman Brothers. He is admitted to the bar in New York and New Jersey though retired from the practice of law. Ken is active in leading professional groups for investment managers as a member of both the CFA Institute and the New York Society of Securities Analysts.

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RIMMY MALHOTRA PORTFOLIO MANAGER, NICOYA CAPITAL Menlo Park, California

Concentrated, long-term investor / Rimmy runs a value-based investment partnership taking a concentrated, long-term approach to investing in smaller capitalization companies.

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immy Malhotra is Partner at Nicoya Capital where he manages the The Nicoya Fund.

Currently, Rimmy serves on the board of HireQuest (ticker: HQI) & Optex Systems (ticker: OPXS), and previously served on the board of Peerless Systems. Rimmy served for three years as a United States Peace Corps Volunteer in Central America. He earned an MBA in Finance from The Wharton School and a master’s degree in International Affairs from The School of Arts & Sciences at the University of Pennsylvania where he is a Lauder Fellow. Rimmy holds undergraduate degrees in Computer Science and Economics from Johns Hopkins University.

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PETER MANTAS GENERAL PARTNER, LOGOS LP Toronto

Toronto-based investment manager / Peter’s investment process applies an interdisciplinary outlook to traditional value investing.

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eter Mantas serves as a general partner of Logos LP. Peter has various business and financial experience at global institutions including senior managerial roles at large information service and enterprise technology companies as well as legal experience within the capital markets, alternative investments and tax groups at McCarthy Tetrault LLP. Peter has been involved in a variety of private equity transactions and led a proprietary trading team for a boutique desk. Previously, he held various economic research positions at federal government departments in Canada. Peter has both an LL.B. and B.C.L. from McGill University’s Faculty of Law. He also obtained an Honours Baccalaureate in Commerce, Magna Cum Laude, from the University of Ottawa, Telfer School of Management.

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JUAN MATIENZO MANAGING PARTNER, MERCOR INVESTMENT GROUP Puebla, Mexico

Deep value investor / Juan follows a disciplined, deep value approach; searching for bargains and holding cash when necessary.

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uan F. Matienzo is the Managing Partner of Mercor Investment Group, where he is responsible for the investment portfolio. Juan follows deep value principles, and prefers companies that trade for less than liquidating value, and at low multiples of normalized earnings. Juan has shared insights into his deep value investment philosophy with MOI Global in the past as well as investment ideas. He has a Bachelor of Business Administration and a Master of Clinical Psychology from UDLAP, and an MBA from the Harvard Business School.

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MICHAEL MELBY FOUNDER & PORTFOLIO MANAGER, GATE CITY CAPITAL MANAGEMENT Chicago

Micro-cap value focused investor / Gate City Capital Management seeks attractive long-term investment returns through focusing on U.S. micro-cap companies.

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ichael Melby is the founder and portfolio manager of Gate City Capital Management.

Before starting Gate City Capital, Michael worked as a research analyst at Crystal Rock Capital Management. Michael previously worked at Deutsche Bank Securities in their Debt Capital Markets group and at the University of Notre Dame Investment Office where he focused on natural resources, fixed income, and risk management. Michael earned an MBA from the University of Chicago Booth School of Business where he graduated with Honors and a BBA in Finance from the University of Notre Dame where he graduated Summa Cum Laude. Michael is a CFA Charterholder and has earned the Financial Risk Manager designation.

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SAMIR MOHAMED COLLABORATIVE VALUE INVESTOR, FAMILY OFFICE Cyprus

Collaborative Value Investor / Samir is a family office fund manager with more than two decades of value investing experience.

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amir Mohamed started with value investing in 1999 and now manages a private family fund, full time since 2016. He focuses on good businesses with temporary problems and suppressed stock prices. Samir enjoys collaborating with other value investors regularly via inperson meetings or Skype calls. He was global head of the product management teams of a 170 Mio. EUR industrial business at Siemens, where he worked for 13 years. Samir has a master’s degree in Management, Technology, and Economics and a bachelor’s degree in material science, both from ETH Zurich.

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KYLE MOWERY MANAGING PARTNER, GRIZZLYROCK CAPITAL Chicago

Value investor / Through rigorous fundamental analysis and relentless discipline, GrizzlyRock seeks mispriced corporate securities.

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yle Mowery is the founder and managing partner of GrizzlyRock Capital. Kyle holds an MBA from the University of Chicago’s Booth School of Business and a BA in Economics from UCLA. GrizzlyRock Capital is an alternative asset management firm seeking to deliver risk-managed returns to investors via mispriced opportunities across various equity markets. The firm takes a value-investing approach to security selection, relying on rigorous fundamental analysis to identify dramatically mispriced corporate securities from the entire capital spectrum. GrizzlyRock Capital is headquartered in Chicago, Illinois.

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YARON NAYMARK PORTFOLIO MANAGER, 1 MAIN CAPITAL New York

Long-term focused investor / 1 Main Capital is a long-biased investment partnership that invests primarily in high quality, attractively valued, growing businesses.

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aron Naymark is the founder and portfolio manager of 1 Main Capital, a boutique investment firm founded in 2018 that seeks to make concentrated investments in highquality, reasonably valued businesses with long reinvestment runways, and special situations undergoing an element of change or temporary dislocation that will cause investors to revalue an investment in the near term. Prior to founding 1 Main Capital, Yaron spent ten years analyzing businesses professionally, including at multi-billion-dollar value-oriented public and private equity firms. Yaron is a South Florida native, a lover of the outdoors, and currently lives in New York City with his wife and dog.

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A.J. NORONHA PARTNER; EQUITY RESEARCH & PORTFOLIO COMMITTEE, DESAI CAPITAL MANAGEMENT Chicago

Broadly experienced investment professional / Discovering, creating, and building alpha in global public & private markets.

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.J. Noronha has over ten years of investment management experience, and has worked closely with Mr. Desai since Desai Capital Management’s inception in 2013 with all aspects of the fund; with his primary responsibilities being equity research, due diligence, and developing investment theses. Prior to DCM, A.J. worked for a mid-market PE/VC fund, and also co-founded a biomedical engineering startup. He earned a degree in Finance, magna cum laude, from the University of Notre Dame and holds a JD from Northwestern University. He is a proud CFA Charterholder, an active Candidate Member of the CFA Society of Chicago & serves on its Professional Development Advisory Group Board, and is a member of Irish Entrepreneurs & Harvard Alumni Entrepreneurs.

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MOHNISH PABRAI MANAGING PARTNER, PABRAI INVESTMENT FUNDS Irvine, California

Investor, philanthropist, author / Mohnish manages a Buffett-style investment partnership and a foundation focused on providing world-class educational opportunities to economically and socially disadvantaged children worldwide.

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ohnish Pabrai is the Founder and Managing Partner of Pabrai Investment Funds, a value-oriented private investment partnership. He is also the Founder and Chairman of The Dakshana Foundation, which has gotten thousands of impoverished, but brilliant students admitted to the IITs. At 24, Mohnish founded TransTech, funding it with $70,000 in credit card debt and $30,000 in 401(k) savings, which he grew to be an Inc. 500 company with revenues over $20 million before selling in 2000. He has been an active member of YPO for over 24 years. Mohnish is author of The Dhandho Investor Investor: The Low-Risk Value Method to High Returns.

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AMAR PANDYA ASSOCIATE PORTFOLIO MANAGER, PENDERFUND CAPITAL MANAGEMENT Vancouver

Contrarian value investor / Amar seeks to identify out-of-favour, quality compound growth businesses, as well as opportunistic close-thediscount investment opportunities.

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mar Pandya is a Senior Investment Analyst and Associate Portfolio Manager. He joined Pender in October 2017. Amar started his investment career in 2011 in the Portfolio Management Training Program at a large global financial services company. Prior to joining Pender, Amar was an Associate Portfolio Manager at a large-cap equity value investment firm based in Winnipeg, Manitoba. He holds a Bachelor of Commerce degree in Finance (Honours) from the University of Manitoba. He earned his Chartered Financial Analyst designation in 2015. Amar is actively involved with CFA Society Vancouver where he serves as a member of the CFA Vancouver Programs Committee. He also sits on the Steering Committee for the Vancouver chapter of Women in Capital Markets.

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MATTHEW PETERSON MANAGING PARTNER, PETERSON CAPITAL MANAGEMENT Greater Los Angeles Area

Results-oriented investment manager / Peterson Capital Management is a concentrated, long-term, value-based fund with a ten year track record of market-beating returns.

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atthew Peterson is the Managing Partner of Peterson Capital Management. Matthew has been working as a financial professional for two decades. Prior to forming Peterson Capital Management, Matthew split time between Wall Street and London as Capital Markets Manager at Diamond Management and Technology Consultants with expertise spanning risk management and derivative processing. His experience includes working with global financial services firms including Goldman Sachs, Morgan Stanley, Merrill Lynch, American Express, and Ameriprise Financial. In 2010, Matthew left Wall Street to launch his fund in Los Angeles. In 2020 he relocated to Austin, Texas. Matthew holds a CFA designation. He earned his Bachelor of Science in economics and minor in mathematics from the University of Puget Sound.

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GOKUL PONNURAJ PORTFOLIO MANAGER - PUBLIC EQUITIES, BAVARIA INDUSTRIES GROUP Munich

Private investor and fund manager / Gokul uses a multidimensional approach to identify emerging small-cap and mid-cap public equities.

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okul Ponnuraj is a value investor with a focus on small- and mid-cap spinoffs and compounders. He has been investing in the Indian markets for more than ten years and in global markets for the last three years. Gokul manages the public equities portfolio at Bavaria Industries Group. The firm uses its balance sheet assets (permanent capital) to invest in opportunities with an attractive risk-reward tradeoff. Prior to Bavaria, Gokul was Vice President of Investments at Stellar Associates. Before that, he was an Investment Research Analyst and eventually Head of Investment Research at HBJ Capital. He holds a Master’s Degree in Finance from London Business School.

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PATRICK RETZER PRESIDENT AND CHIEF INVESTMENT OFFICER, RETZER CAPITAL MANAGEMENT Milwaukee, Wisconsin

Highly experienced asset manager / Pat’s more than three decades of experienced gives him a unique perspective on the financial markets.

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atrick Retzer spent the first several years of his career in public accounting and then developing tax planning software all while earning a Master’s in Taxation. He moved into investment management in 1987, joining Heartland Advisors, manager of the Heartland family of mutual funds in Milwaukee, Wisconsin. While at Heartland, he was portfolio manager of the Heartland US Government Securities Fund, he started and managed the Heartland Wisconsin Tax Free Fund, was co-manager of the Heartland Value Plus Fund, and managed private accounts. In 2000, Pat left Heartland Advisors to start Retzer Capital Management, LLC and the Retzer Fund I, LP. 94

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BOB ROBOTTI CHIEF INVESTMENT OFFICER, ROBOTTI & COMPANY New York

Classic value investor / Bob has spent over 30 years building an entrepreneurial culture that has attracted independent thinking analysts who are passionate about value investing.

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ob Robotti is the Founder, President and CIO of Robotti & Company Advisors, a registered investment advisor based in New York City. Guided by the classic tenets of value investing, Robotti & Company Advisors uses a proprietary research approach to identify companies with solid balance sheets and the ability to generate significant amounts of free cash flow; yet are misunderstood, neglected, or just out-of-favor. Robotti’s investment team focuses on deep primary research to select investment holdings through the lens of a long-term business owner. Bob serves on various corporate boards. Prior to founding Robotti & Company in 1983, he was the CFO of Gabelli & Company. Bob holds a BS from Bucknell University and an MBA from Pace University.

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JIM ROUMELL PRESIDENT, ROUMELL ASSET MANAGEMENT Chevy Chase, Maryland

Opportunistic value investor / Placing an emphasis on buying at a discount, Jim has built a successful asset management firm focused on finding value by pursuing securities that are out of favor, overlooked, or misunderstood.

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im Roumell entered the securities industry in 1986. Before founding Roumell Asset Management, he was a Registered Principal at Raymond James Financial Services, Inc. Jim was selected to participate in, and won, two consecutive Wall Street Journal stock picking contests (in 2001 and 2002) before the contest was discontinued. Jim has been featured in such publications as Barron’s, Kiplinger’s, Value Investor Insight, Financial Planning Magazine, and The Washington Post. Jim is also listed and quoted in The Art of Value Investing: How the World’s Best Investor’s Beat the Market. He is a graduate of Wayne State University in Detroit, Michigan.

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CHRISTIAN RYTHER PORTFOLIO MANAGER, CURREEN CAPITAL New York

Concentrated global small cap investor / Christian is an investor focused on excellent businesses with exceptional management teams, whose securities are undervalued.

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hristian Ryther founded Curreen Capital in 2013. Curreen focuses on particularly attractive areas, especially where distortions and transformations are created by a company transacting directly with its shareholders (aka ‘Special Situations’). The fund invests in relatively few positions and holds cash when necessary. Previously, Christian worked at NeuStrada Capital, Principled Capital Management, and Riva Ridge Capital Management.

Christian earned an MBA from the Columbia Business School, where he was selected to join the school’s elite Value Investing Program. Christian holds a bachelor’s degree in economics from Boston College.

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NITIN SACHETI PORTFOLIO MANAGER, ARS INVESTMENT PARTNERS New York

Investor and author / Nitin has honed a bottoms-up investment process, focusing on free cash flow generation over time.

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itin Sacheti is a Portfolio Manager at ARS Investment Partners. Prior to joining ARS, Nitin founded Papyrus Capital and beforehand, was a Senior Analyst/Principal with Equity Contribution at Charter Bridge Capital. Previously, he was a Senior Analyst at Cobalt Capital and Tiger Europe Management. Nitin began his investment career in 2006 at Ampere Capital Management, initially as a Junior Analyst, later becoming Assistant Portfolio Manager. He graduated from the University of Chicago with a BA in Economics, was a visiting undergraduate student in Economics at Harvard University and attended the Loomis Chaffee School in Windsor, CT. Nitin is the author of Downside Protection, Process and Tenets for Short Selling in All Market Environments.

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DANILO SANTIAGO PORTFOLIO MANAGER, RATIONAL INVESTMENT METHODOLOGY New York

Experienced Portfolio Manager and Analys / Danilo focuses on a relatively small, quasi-static group of public companies which fall within his circle of competence.

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anilo Santiago is the founder of Rational Investment Methodology (RIM). RIM employs extensive industry research and analysis, building highly detailed proprietary discounted-dividend models, which are used to determine “fair values” of companies based on different scenarios. Lastly, RIM constructs “rules-based” model portfolios (long-short, long-only or long- aggressive) with a company-specific margin of safety relative to “fair value”, using its proprietary Odysseus Portfolio Construction Tool. Selected model portfolios are replicated into clients’ accounts, using Interactive Brokers’ platform, adjusting the number of shares in each client’s portfolio in a pari-passu manner. Mr. Santiago is a MBA from Columbia University and has a B.S. in Electrical Engineering from the University of São Paulo.

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ADRIAN SAVILLE FOUNDER AND CHIEF EXECUTIVE, CANNON ASSET MANAGERS Johannesburg, South Africa

Investment industry thought leader / Adrian has worked in the investment industry since 1994; gaining extensive experience across all major asset classes.

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drian Saville is the CEO of Cannon Asset Managers. In 1994, Adrian formed the investment vehicle that became the forerunner to Cannon Asset Managers, which he founded in 1998 and was acquired in 2017 by Bidvest Financial Services. He has managed Cannon Asset Managers’ Focused Equity Portfolio since 1998; amassing a stellar, market-beating record. In 2013, Adrian launched the Hummingbird Fund, a concentrated mid-to-micro-cap portfolio. Adrian’s has a Bachelor of Arts (Honours) (cum laude), M.Com (cum laude) and PhD (Economics), from the University of Natal. He is a UNESCO laureate and a matriculant of Linacre College (Oxford). He has completed programmes at Columbia and Harvard. He is also an acclaimed professor in Economics at Gordon Institute of Business Science.

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SAM SHELDON RESEARCH ANALYST, PUNCH & ASSOCIATES INVESTMENT MANAGEMENT Saint Paul, Minnesota

Boutique investment firm analyst / MOI Global is grateful to have Sam back with us in 2021 to share his wisdom and insights.

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am Sheldon joined Punch & Associates as an intern in June of 2016, while attending the University of St. Thomas where he also led the University’s Investment Club. After graduating in May of 2018 with a BA in Financial Management, he joined the team full-time as an investment research analyst. Punch & Associates is an employee-owned wealth planning and investment firm with a strong history of delivering a high level of client service, expert advice and exceptional investment performance; offering services to a select group of families and family offices of substantial wealth.

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JOSH SHORES PRINCIPAL, SOUTHEASTERN ASSET MANAGEMENT Memphis, Tennessee

Investing like a business owner / Josh executes an investment strategy that places an emphasis on classic value investing tenets such as bottom-up company analysis, thinking like an owner, and requiring a margin of safety.

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osh Shores is a co-portfolio manager for Longleaf Partners International Fund and a member of Southeastern Asset Management’s Executive Committee. After seven years in Southeastern’s London office, Mr. Shores is now based in Memphis. He splits his time between our Memphis and global offices and remains focused on Non-US investments. He joined Southeastern in 2007 after working at Smith, Salley & Associates in Greensboro, NC and Franklin Street Partners in Chapel Hill, NC. Mr. Shores holds bachelor’s degrees in Philosophy and Religious Studies from the University of North Carolina.

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KEITH SMITH FUND MANAGER, BONHOEFFER FUND Rochester, New York

Seeking unconventional opportunities / Keith utilizes his experience in analyzing business operations and capital structures to pursue mispriced equities.

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eith Smith brings over 20 years of valuation experience to the Bonhoeffer Fund, where he currently serves as a Portfolio Manager. Previously, he was Managing Director of Empire Valuation Consultants. Keith’s expertise includes corporate transactions, distressed loans, derivatives, and intangible assets. Warren Buffett and Benjamin Graham’s value-oriented approach of pursuing the “fifty-cents on the dollar” opportunities, underpins Keith’s investment strategy. The combination of his experience and track record led Keith to commit most of his investable net worth to the Bonhoeffer Fund model. He is a CFA charterholder and received his MBA from UCLA. 103

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GUY SPIER FOUNDER, AQUAMARINE CAPITAL MANAGEMENT, LLC Zurich

Value Investor & Author / Guy manages an investment partnership inspired by, and styled after the original 1950’s Buffett partnerships.

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uy Spier is a Zurich-based investor and the author of The Education of a Value Investor. He has managed the Aquamarine Fund since 1997. In June 2007 he made headlines by bidding US$650,100 with Mohnish Pabrai for a charity lunch with Warren Buffett. Prior to starting Aquamarine Fund, Guy worked as an investment banker in New York, and as a management consultant in London and Paris. Guy completed his MBA at the Harvard Business School and holds a First Class degree in Politics, Philosophy and Economics from Oxford University. He also serves on the advisory board of Horasis, and is a co-host of TEDxZurich.

Spier is a member of YPO, EO, Zurich Minds and the Latticework Club.

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JEFF STACEY CHAIRMAN AND CEO, STACEY MUIRHEAD CAPITAL MANAGEMENT Kitchener, Canada

Fundamental, intelligent investor / Jeffrey and his team run a boutique investment firm in Ontario utilizing the time-tested principles of intelligent investing.

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effrey Stacey is the founder of Stacey Muirhead Capital Management Ltd. Jeff has over 30 years of investment industry experience. Prior to starting Stacey Muirhead Capital Management Ltd., he was employed with a boutique Toronto investment firm where he was also a shareholder. He is a member of the Finance and Investment Committee and an Advisory Board Member of the student managed School of Accounting and Finance Investment Fund at the University of Waterloo. He is also an Advisory Board Member of the student managed Ivey Value Fund at the University of Western Ontario. Jeff has an Honours Bachelor of Business Administration degree from Wilfrid Laurier University and is a Chartered Financial Analyst.

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GLENN SUROWIEC PORTFOLIO MANAGER, GDS INVESTMENTS West Chester, Pennsylvania

Value-oriented wealth manager / GDS specializes in managing investment accounts for individuals seeking a more customized approach than conventional retirement accounts.

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lenn Surowiec founded GDS Investments in 2012. Prior to that, he worked for Alsin Capital Management, Inc. as an equity research analyst (2001-2003), co-portfolio manager (2003-2008), and portfolio manager (2008-2012). Before joining ACM, Glenn worked for Enron Corp. as a derivatives structuring manager, and for Commerce Bancorp (now TD Bank) as a real estate credit analyst. Glenn has a B.A. in Management (Accounting concentration) from Gettysburg College and an MBA (Finance concentration) from Southern Methodist University. He graduated in the top ten percent of his MBA class and participated in study-abroad programs both as an undergraduate (Seville, Spain) and graduate student (Melbourne, Australia).

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JEFF SUTTON FOUNDER AND PRESIDENT, VALUETREE INVESTMENTS Charlotte, North Carolina

Focused small-cap value Investor / ValueTree manages a concentrated portfolio of carefully researched, small-cap stocks; with low correlation to major market indices.

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eff Sutton has over 20 years of investment experience, and has been a CFA charterholder for over 17 years. In addition to his work as the Founder and President of ValueTree, Jeff is also the Chief Operating Officer of Fundamental Global, an alternative asset manager.

Prior to founding ValueTree, he worked as an equity analyst for a long-short hedge fund, as a project manager at a $1 billion family office, and as an associate at a Southeastern private equity firm. Academically, he graduated summa cum laude and Phi Beta Kappa from Rhodes College with two B.A. degrees, with majors in International Business and French. He has also earned a MBA from the Darden Graduate School at the University of Virginia.

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WILL THOMSON MANAGING PARTNER, MASSIF CAPITAL New York

Finding opportunities in real assetts / Massif Capital simplifies the complex process of investing in Basic Materials, Energy and Industrial businesses..

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ill Thomson is the Founder and Managing Partner of Massif Capital. Massif invests principally in businesses with long-lived assets that generate predictable cash flows and require capital allocation acumen and a keen focus on operational excellence from management. Will has experience in private equity and credit/political risk insurance; in addition to having served as a strategic and economic adviser to NATO/ISAF in Afghanistan. Before starting Massif Capital, He worked in the New York office of Chaucer, a Lloyd’s of London insurance syndicate. Will is a Graduate of Trinity College and holds a Masters in Government from Harvard University.

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ELLIOT TURNER MANAGING PARTNER, RGA INVESTMENT ADVISORS Stamford, Connecticut

Uncovering companies with exceptional business economics / Elliot has shared his in-depth equity research at numerous MOI Global venues, consistently highlighting companies whose business model quality is underappreciated by other investors

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lliot Turner is a co-founder and managing partner at RGA Investment Advisors, LLC. RGA Investment Advisors runs a long-term, low turnover, growth at a reasonable price investment strategy seeking out global opportunities. Elliot focuses on discovering and analyzing long-term, high quality investment opportunities and strategic portfolio management.

Prior to joining RGA, Elliot managed portfolios at at AustinWeston Asset Management LLC, Chimera Securities and T3 Capital. Elliot holds the Chartered Financial Analyst (CFA) designation as well as a Juris Doctor from Brooklyn Law School.. He also holds a Bachelor of Arts degree from Emory University where he double majored in Political Science and Philosophy.

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RUDI VAN NIEKERK FOUNDER AND FUND MANAGER, DESERT LION CAPITAL Cape Town, South Africa

South African equity specialist / With original thinking and concentrated investing based on fundamentals, Rudi has developed an impressive track record.

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udi van Niekerk manages the Desert Lion Capital Fund. He is a South African citizen.

After years of political dysfunction and general emerging market underperformance, South Africa is one of the statistically cheapest markets globally, with growing businesses regularly commanding single-digit P/E’s. The Fund Manager has extensive experience investing in JSE small- and mid-cap securities – a sector which is characterized by a striking lack of institutional, analyst, and capital attention. The Fund employs a fundamental, researchdriven process and is willing to accept volatility and lower liquidity in pursuit of superior returns over a multi-year time horizon. Rudi is a CFA charterholder and earned Bachelor of Commerce and MBA (cum laude) degrees from the University of Stellenbosch.

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OMRI VELVART MANAGING PARTNER, LEGACY VALUE PARTNERS Tel Aviv

Investing in Israel, U.S and the U.K. / Omri looks for unmatched business footprints, investing for the long term in a concentrated portfolio of great companies.

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mri Velvart is the Founder and Chief Investments Officer of Legacy Value Partners, a Tel Aviv based Hedge Fund. Legacy Value Partners invests in a concentrated portfolio of great businesses that possess an almost impossible to replicate Footprint, strong management teams, a Wide Moat that keeps on widening and a strong financial position. The fund elevates strong ties and expertise in the Israeli Tech Ecosystem, Global and Local Software and Services Niche Winners and Digital Media. Omri’s past experience includes diverse work in business and research analysis. He also served in the Israel Defense Forces and received a Bachelor of Laws of The Hebrew University.

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JEAN PIERRE VERSTER CEO, PROTEA CAPITAL MANAGEMENT Johannesburg, South Africa

A “quantamental” investor / Jean Pierre employs a proprietary ‘quantamental’ investment process; combining quantitative and qualitative analysis in selecting investments.

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ean Pierre Verster is the founder & CEO of Protea Capital Management, an investment management firm headquartered in Johannesburg, South Africa. He was part of the investment team at 36ONE Asset Management, which manages the largest hedge fund in South Africa, from 2010 to 2016. He partnered with Fairtree Asset Management thereafter to launch the Protea range of hedge funds. In 2019, he founded Protea Capital Management as a standalone investment management business. Since 2015, Jean Pierre also serves as an independent non-executive director at Capitec Bank, the largest retail bank in South Africa by number of clients, where he is chairman of the audit committee.

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AMIT WADHWANEY PORTFOLIO MANAGER AND CO-FOUNDING PARTNER, MOERUS CAPITAL MANAGEMENT New York

Finding opportunity in well-capitalized companies / Moerus uses a bottom-up approach to opportunistically build a portfolio of companies with the strength to withstand adversity.

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mit Wadhwaney is a Co-Founder and Portfolio Manager at Moerus Capital Management and the founding manager of the Moerus Worldwide Value Fund. He has over 25 years of experience researching and analyzing investment opportunities worldwide. Prior to founding Moerus, Amit was a Portfolio Manager and Partner at Third Avenue Management.

Before that, he worked at M.J. Whitman, a New York-based broker-dealer, Bunting Warburg, a Canadian brokerage firm, and Domtar, a Canadian forest products company. He holds an M.B.A. in Finance from The University of Chicago, a B.A. with honors and an M.A. in Economics from Concordia University, and B.S. degrees in Chemical Engineering and Mathematics from the University of Minnesota.

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MORDECHAI YAVNEH FOUNDER & MANAGER, FOCUS CAPITAL MANAGEMENT New York

Focused, concentrated investor / Mordechai utilizes a highly concentrated investment approach; building a deep understanding of holdings.

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ordechai Yavneh is the founder and manager of New York-based Focus Capital Management, a boutique, long-only hedge fund launched in 2013. Focus Capital Management is a fund with a fairly unique approach to investing. Its unique advantage comes from implementing and capitalizing on the value that concentration brings to an investor’s portfolio. The fund focuses time, energy, research, analysis, and resources on its best ideas to generate superior long-term returns with a reduced level of risk built into each investment; aiming to invest in 4-5 positions at a time. This concentration and the deep research invested in each position is the driver of long-term success.

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SOUMIL ZAVERI PARTNER, DMZ PARTNERS Mumbai, India

Mumbai-based investment manager / Soumil manages a family office structure which is transitioning into a boutique investment management firm.

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oumil Zaveri moved to the US from Mumbai in 2005 to study Economics and Biology at Duke University. In the summer of junior year, he interned with Goldman Sachs in New York on the healthcare team within the Research division. He was extended a full time offer and joined the banking team there after graduation. He moved back to Mumbai in 2011, founding DMZ partners to allocate family capital along with his father, Sanjay, who has played a key role in shaping his investment philosophy. DMZ Partners received its SEBI Portfolio Manager Registration in 2018 and is cautiously curating their outside investor base to ensure that their investors’ philosophies and expectations are well aligned over the long-term.

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