Latest / The Dutch Investors / #47 | Strategic mediocrity, owner mindset & conviction | Interview w/ Dan Shuart from Eagle Point Capital

Transcript

#47 | Strategic mediocrity, owner mindset & conviction | Interview w/ Dan Shuart from Eagle Point Capital · The Dutch Investors

• 0:00
  SPEAKER_00: Welcome back to another episode by The Dutch Investors.
• 0:03
  SPEAKER_00: And today we're diving deep into long-term investing, capital preservation, the mindset behind running a portfolio.
• 0:11
  SPEAKER_00: Our guest is Dan Stuart, founder of Eagle Point Capital, and he is someone who thinks deeply about risks, resilience, and how to grow purchasing power over decades.
• 0:22
  SPEAKER_00: He's written several very good letters, which we'll talk about all about in a second.
• 0:29
  SPEAKER_00: Before starting Eagle Point, Dan was part of a, please correct me if I'm wrong, a private equity firm where he worked closely with portfolio companies from acquisition all the way through exit.
• 0:42
  SPEAKER_01: That's right.
• 0:42
  SPEAKER_01: Yep, you got it.
• 0:43
  SPEAKER_01: We can talk about that more in a bit, but yep, that's that's exactly right.
• 0:47
  SPEAKER_00: Awesome.
• 0:47
  SPEAKER_00: Well, it sounds like the perfect guest to learn more about all these fascinating topics.
• 0:53
  SPEAKER_00: So let's jump into the conversation.
• 0:56
  SPEAKER_00: Dan, thanks so much for joining me.
• 0:58
  SPEAKER_00: How about we start at the beginning?
• 1:01
  SPEAKER_01: Yeah.
• 1:02
  SPEAKER_00: What's the story behind Eagle Point Capital?
• 1:05
  SPEAKER_00: What's the story behind you?
• 1:07
  SPEAKER_00: Why did you start investing at all?
• 1:10
  SPEAKER_00: And uh perhaps some background on who you are.
• 1:12
  SPEAKER_01: Yeah, that's great.
• 1:13
  SPEAKER_01: Now, thanks for having me on the show, and I'm looking forward to the conversation.
• 1:16
  SPEAKER_01: Um, so yeah, it probably makes sense from a background standpoint to go back to uh kind of the college days.
• 1:22
  SPEAKER_01: So I actually I have a bit of a non-traditional background, you know, when it comes to investing.
• 1:27
  SPEAKER_01: Um, I have an engineering degree uh from the University of Michigan.
• 1:30
  SPEAKER_01: So I'm from Michigan, went to school at the University of Michigan, uh, had a degree in industrial engineering, so kind of process focused and a lot of statistics and things like that.
• 1:40
  SPEAKER_01: Uh my senior year, late junior, early senior year, I kind of got introduced to investing.
• 1:45
  SPEAKER_01: One of my uncles gave me Howard Marks' first book called The Most Important Thing.
• 1:49
  SPEAKER_01: And that was kind of my first intro.
• 1:51
  SPEAKER_01: I knew about the stock market and I had taken some accounting classes and things like that, but never had really thought too deeply about investing.
• 1:58
  SPEAKER_01: And I read that book and it immediately just grabbed my attention.
• 2:02
  SPEAKER_01: I couldn't, yeah, I couldn't put it down.
• 2:04
  SPEAKER_01: And everything in it made sense to me.
• 2:06
  SPEAKER_01: Kind of that whole value mindset of trying to buy things for less than they're worth, you know, that made a lot of sense to me.
• 2:12
  SPEAKER_01: Um, the analytical piece was interesting to me as an engineer, the you know, the competitive piece, and just using it as a framework to learn about the world.
• 2:21
  SPEAKER_01: Um, the more and more I read about investing kind of in those early days, the more I liked it.
• 2:25
  SPEAKER_01: And so I left college.
• 2:27
  SPEAKER_01: I had already taken a job uh in industry, but I knew at some point I was gonna be an investor full-time because it's what I love to do.
• 2:34
  SPEAKER_01: It didn't, it didn't feel like it was it was work, it was interesting and fun and intellectually challenging.
• 2:39
  SPEAKER_01: And so I knew that's what I wanted to do, you know, eventually.
• 2:41
  SPEAKER_01: I wasn't sure how, but I knew that's the field I was gonna go into.
• 2:45
  SPEAKER_01: So it was uh, you know, that that was kind of the the very early days of of how I got interested.
• 2:50
  SPEAKER_00: I would love to dive into the the how.
• 2:52
  SPEAKER_00: How do you start something like that?
• 2:55
  SPEAKER_00: Most of our listeners are investors, mostly individual investors.
• 2:59
  SPEAKER_00: They just invest their own money.
• 3:01
  SPEAKER_00: So yeah, how do you start your own fund?
• 3:04
  SPEAKER_00: Uh, how did you get started?
• 3:05
  SPEAKER_01: Yeah, so kind of even before the before we started um, you know, Eagle Point, um, just learning how to become an investor, I think there's really no no other way other than just doing a lot of reading and a lot of uh a lot of practice, right?
• 3:19
  SPEAKER_01: So you have to find an approach, and there's no one right approach for investing.
• 3:23
  SPEAKER_01: You have to find the approach that works for you, most importantly, that you can stick with for decades.
• 3:28
  SPEAKER_01: As I'm as I'm sure we'll get into, that's the time horizon is the most important piece, you know, of being a successful investor, being able to stick with something um over years and years and years when it works, and most importantly when it doesn't work, because no style works, you know, every year, you know, without fail.
• 3:43
  SPEAKER_01: And so in the in the when I was kind of teaching myself what was gonna work for me, it was really just about reading as much as I could.
• 3:50
  SPEAKER_01: I read about, you know, everything from trading options to all the Buffett letters to all of Howard Marks' memos, Joel Greenblatt's books, anything I could get my hands on to figure out, you know, what was gonna work for me.
• 4:01
  SPEAKER_01: And then eventually you find a style that resonates with you that you can apply to um to the actual practice of investing.
• 4:08
  SPEAKER_01: So there's there's a period of reading about investing, and then you transition to reading about businesses.
• 4:12
  SPEAKER_01: And that's where the the real work comes in is trying to apply those concepts to stocks.
• 4:18
  SPEAKER_01: And and there's the only way that we know how to do that is by by reading about them, um, reading 10Ks, reading transcripts, reports, you know, newspapers, things like that.
• 4:27
  SPEAKER_01: Um, so that that's kind of how how the approach that we'll get into um was formed.
• 4:33
  SPEAKER_01: And then um, so I spent time working as an engineer.
• 4:37
  SPEAKER_01: I was an operational leader in a soft gel manufacturing plant, like a vitamin plant.
• 4:42
  SPEAKER_01: Um, and then eventually um I went to so I went to college with Matt Franz, who's uh co-owner of EgoPoint Capital.
• 4:49
  SPEAKER_01: He actually started the business um in 2017, and we reconnected um kind of right before then um and realized that we wanted the same things.
• 4:59
  SPEAKER_01: We both wanted to own an investment firm, and we had the same outlook on life, the same outlook in terms of our investment style, and wanted to run the company the same way.
• 5:09
  SPEAKER_01: So we agreed to to you know go into business together.
• 5:12
  SPEAKER_01: Um I worked in private equity for a couple of years kind of as a transition.
• 5:15
  SPEAKER_01: It's kind of tough to go from being an engineer straight to managing managing capital.
• 5:19
  SPEAKER_01: So it was a great transitionary period where worked you know for a couple of years with um with a private equity company doing lower middle market, you know, leverage buyouts here, totally different style than than we apply, you know, to the stock market, but learned a lot about the credit markets and um how to really the most important thing I learned was uh you know understanding business metrics and and tracking what matters apart from the financials, what what matters in terms of the business KPIs that you want to track and keep your eye on over the long run and it helped me kind of cut through the noise, you know, um when we transition to public equities.
• 5:53
  SPEAKER_01: Um so that that's kind of the you know the long-winded background of of before Eagle Point Capital.
• 5:58
  SPEAKER_01: Um Matt and I you know decided to go into business together and registered the company in uh January of 2019.
• 6:05
  SPEAKER_01: So we registered as an investment advisor.
• 6:08
  SPEAKER_01: Um the way we're set up is we primarily manage uh separate accounts, so SMAs or separately managed accounts.
• 6:14
  SPEAKER_01: Um the reason we we chose that route as opposed to a you know a blind pool fund initially was mainly ease of startup and access to a broad base of potential investors.
• 6:26
  SPEAKER_01: We started very small and we wanted to be able to open to you know the strategy to to friends, family, you know, really anyone that was interested in investing.
• 6:34
  SPEAKER_01: Um, and that gave us a great avenue to do so.
• 6:36
  SPEAKER_01: And and so that was kind of the the the early genesis of of you know how we structured the company.
• 6:42
  SPEAKER_00: Uh I'm not familiar with uh the two the two different options you have.
• 6:47
  SPEAKER_00: What's the main difference?
• 6:48
  SPEAKER_01: So the vast majority of our accounts are just individual accounts that are each client, you know, has access to their account.
• 6:57
  SPEAKER_01: They can move capital in or out, though it's obviously a long-term you know focus.
• 7:02
  SPEAKER_01: Um, and we manage all of those accounts para pursuit.
• 7:05
  SPEAKER_01: So they all own the same portfolio.
• 7:07
  SPEAKER_01: We can trade them, you know, when we make an investment, we can we can do it so everybody buys that stock in the same allocation at the same time.
• 7:15
  SPEAKER_01: If it's if we're buying a 10% position and someone has a million dollars with us, they'll own$100,000 worth of that stock.
• 7:22
  SPEAKER_01: If someone has$100,000 with us, they'll own$10,000 with that stock.
• 7:25
  SPEAKER_01: We do have a small committed uh fund as well, where it that's you know, all the capital goes into one account, one vehicle, and and that is invested um alongside you know all the the separately managed accounts.
• 7:37
  SPEAKER_01: But we started with just separate accounts.
• 7:40
  SPEAKER_01: Um, does that make sense?
• 7:41
  SPEAKER_00: Yeah, that makes sense.
• 7:43
  SPEAKER_00: And do you invest your personal uh wealth in the fund as well, or is that separate?
• 7:48
  SPEAKER_01: Yep, that was one of the big things, kind of one of the one of the founding you know tenants of of Matt and I's philosophy is having all of our capital alongside our clients.
• 7:57
  SPEAKER_01: So we have a hundred percent of our liquid net worth invested in the same portfolio as all of our investors.
• 8:02
  SPEAKER_01: We just don't think it makes sense to buy a stock for somebody that we're managing their money that we don't buy for ourselves.
• 8:08
  SPEAKER_01: And so all of our money, all of our family's money, you know, our parents are retired, our siblings, aunts and uncles, you know, all of that we're managing alongside our own capital.
• 8:17
  SPEAKER_01: Um, and so it, you know, it creates a lot of pressure, but it also creates a great dynamic because it forces you to really think and think about the downside protection first because you're investing your family's money, you're investing your own money, and that's how it should be, in our view, you know, with with money managers.
• 8:33
  SPEAKER_00: I agree.
• 8:34
  SPEAKER_00: It uh aligns the incentives better.
• 8:36
  SPEAKER_01: Yeah.
• 8:37
  SPEAKER_00: So where did the name come from?
• 8:39
  SPEAKER_00: Uh is it is it is it just uh a random name or is it uh does it have a story behind it?
• 8:44
  SPEAKER_01: No, there's a little bit to it.
• 8:46
  SPEAKER_01: Yeah, nothing too crazy, but so Matt's family has a has a family cottage on a lake just a couple hours south of of where we are today, and there's a there's a uh part of the lake called Eagle Point, and it's uh you know, it's a it's a nice scenic area, and and so um it's just kind of goes back to to Matt's family, you know, the their family lake house.
• 9:05
  SPEAKER_00: Isn't it the national bird for the United States too?
• 9:08
  SPEAKER_01: Or I think so.
• 9:09
  SPEAKER_01: You know, the eagles are pretty cool, and there's it's definitely you know, they're definitely the uh the symbol for the you know kind of freedom US and stuff like that.
• 9:16
  SPEAKER_01: Capitalism, yeah.
• 9:17
  SPEAKER_01: I wish there was I wish that was kind of the reason we chose it, but yeah, it happens to work out, but you can always change the story later, right?
• 9:24
  SPEAKER_01: Exactly, yeah, exactly.
• 9:26
  SPEAKER_01: No one no one will know, right?
• 9:28
  SPEAKER_00: No one will know.
• 9:29
  SPEAKER_00: Uh we'll have to edit this out now.
• 9:30
  SPEAKER_00: But um anyway, one of the first things I noticed, I like to do uh some uh some to check the background and the the story and check the people's LinkedIn and the websites.
• 9:40
  SPEAKER_00: And I went through I would say about 10 of your uh letters, and um first of all, I I really like the writing style, it feels very genuine, and I like something I like doing on the podcast is telling stories, and the way you're writing is kind of a bit of storytelling, which I I really enjoy.
• 10:00
  SPEAKER_00: So um congrats on that.
• 10:02
  SPEAKER_00: It's really nice.
• 10:03
  SPEAKER_01: Thank you.
• 10:04
  SPEAKER_00: One of the first things I noticed in the material is your focus on avoiding permanent capital loss, and that's a bit different from avoiding drawdowns.
• 10:17
  SPEAKER_00: Uh, can you walk us through what that means in practice?
• 10:21
  SPEAKER_00: How how does that show up in your investment decisions?
• 10:25
  SPEAKER_01: Yeah, no, that's a great question.
• 10:27
  SPEAKER_01: And I think it is the most important piece of uh being a successful investor is avoiding big losers first, and then the winners tend to take care of themselves.
• 10:36
  SPEAKER_01: And so the way we try to avoid permanent loss of capital in any given investment is we tend to focus heavily on um free cash flow yield.
• 10:45
  SPEAKER_01: And so if we're if we're getting, if we find a business and it's returning a lot of cash to shareholders via, you know, share of purchases or dividends and has you know minimal capex needs, it's very hard if you buy that stock at a high free cash flow yield, it's hard to lose money.
• 11:01
  SPEAKER_01: So let's just say a good example is uh a British American tobacco.
• 11:05
  SPEAKER_01: We bought that stock last year.
• 11:07
  SPEAKER_01: Um, it was yielding about 10% at the time.
• 11:10
  SPEAKER_01: They were doing some buybacks, you know, trading for a kind of a mid-single digit multiple of free cash flow.
• 11:16
  SPEAKER_01: And unless you're wrong about the cash flow stream and the cash flow stream, you know, ends up becoming impaired, that that's that's a different scenario.
• 11:23
  SPEAKER_01: If you're right about the earnings and you're getting a double-digit percentage of those earnings back in relation to your purchase price every year, it's it's very hard to lose money in that scenario.
• 11:33
  SPEAKER_01: The business has to really deteriorate.
• 11:35
  SPEAKER_01: And it doesn't mean the stock can't get marked down to five times earnings, but then your capital return just goes up as a percentage of the new market cap.
• 11:44
  SPEAKER_01: And so that's the first area of focus is cash flow generation, capital allocation combined with a low purchase price gives you a very good starting point to not losing money over the long run.
• 11:56
  SPEAKER_01: And the second piece is, like I mentioned, the business model.
• 11:59
  SPEAKER_01: And so we focus on very simple businesses that we understand that we believe we can predict with a high degree of you know of confidence that we're gonna be correct, at least in the ballpark, about what that cash flow stream is gonna do over the next five to 10 years.
• 12:14
  SPEAKER_01: And so those are the two things we focus on.
• 12:15
  SPEAKER_01: And it doesn't mean we're always right.
• 12:17
  SPEAKER_01: You know, we we will still lose money on occasion.
• 12:19
  SPEAKER_01: Um, but it's a good starting point.
• 12:20
  SPEAKER_01: It gives you a good base rate for success.
• 12:22
  SPEAKER_00: I haven't talked to many fund managers, investors, business people that use the free cash flow yields.
• 12:28
  SPEAKER_00: Why specifically that metric over other valuation metrics?
• 12:33
  SPEAKER_01: Yeah, yeah.
• 12:33
  SPEAKER_01: It's it's because we try to think of every business, every stock, you know, from a private owner mindset.
• 12:40
  SPEAKER_01: And if any anytime we're gonna buy a stock, we ask ourselves the first filter is would we buy this business in whole, so 100% uh privately, if we had the money and the ability to do so?
• 12:51
  SPEAKER_01: And if the answer is no, because either we don't understand it well enough or it's not high quality enough, it's not predictable enough, it's not, or the or the price is too high, then we shouldn't buy any shares if we're not willing to own the whole thing.
• 13:03
  SPEAKER_01: And if we were to own the whole thing in uh as a private owner, our returns would match the free cash flow yield because we would be, you know, we would purchase the company, and then any free cash that was available to shareholders, we would distribute to ourselves, just like you know, like Berkshire Hathaway does when they buy a company and whole, their returns match the cash flow stream that comes back to the owners.
• 13:23
  SPEAKER_01: And so that's that's why we like to use that metric, you know, in the public markets because we are owners, we're just minority owners, and our returns should mirror the free cash flow yield plus the growth that we get.
• 13:33
  SPEAKER_00: Is there like a hurdle rate or does it depend on each company?
• 13:37
  SPEAKER_01: Yeah, it depends a bit.
• 13:39
  SPEAKER_01: I mean, our our investment hurdle rate is we're looking for mid-teens returns when we when we buy a company or when we buy a stock.
• 13:46
  SPEAKER_01: And so our forward return expectations have to be mid-teens or higher, you know, with a with a pretty high degree of confidence in order for us in order for that to meet our hurdle rate.
• 13:56
  SPEAKER_01: And then we tend to focus the most heavily, you know, the most uh the heaviest component of our forward returns is yield and so free cash flow yield.
• 14:06
  SPEAKER_01: And and typically a lot of that free cash flow is coming back to us via you know dividends and share repurchases.
• 14:11
  SPEAKER_01: And then the next component is growth.
• 14:14
  SPEAKER_01: And so we like businesses that grow.
• 14:15
  SPEAKER_01: We're not we're not unwilling to buy businesses that aren't growing or that are growing slowly.
• 14:20
  SPEAKER_01: That doesn't bother us, but we do like to at least you know own businesses that we believe are going to grow at an inflation, you know, rate over time to kind of protect their margin profile.
• 14:29
  SPEAKER_01: And so let's say we buy a company at a you know 10% free cash flow yield, we expect it to grow 5% a year, and we can talk more about how we define growth, but then your base business return is about 15%.
• 14:41
  SPEAKER_01: And if you buy a business for 10 times and you think it's worth 15 to 20 times because of the growth profile over the long run and the characteristics of the business, then you're gonna get a valuation re-rating on top of that, you know, depending on when it happens.
• 14:54
  SPEAKER_01: And so that's our framework.
• 14:56
  SPEAKER_00: You talked about Berkshire Hathaway.
• 14:58
  SPEAKER_00: Warren Buffett has made basically all investment decisions over the last 60 years, uh, say, although that changed a bit over the last couple of years, uh, I think due to age, of course.
• 15:10
  SPEAKER_00: Yep.
• 15:10
  SPEAKER_00: So, how does that work for uh for you?
• 15:12
  SPEAKER_00: I believe the three of you run the fund together.
• 15:16
  SPEAKER_00: So, how do you balance like uh decision making?
• 15:19
  SPEAKER_00: I I can imagine you you're not always on the same page when it comes to companies and uh making a decision.
• 15:26
  SPEAKER_01: Yeah, great.
• 15:27
  SPEAKER_01: That's a great question.
• 15:28
  SPEAKER_01: So Matt and I uh run the portfolio, so we make all of the investment decisions, and we have a really simple rule that we've been using um you know for the last six years since we started, and it's just any buy or sell decision has to be unanimous.
• 15:41
  SPEAKER_01: And so if we don't both agree, and if it's not both obvious to us, if it's not obvious to the both of us, then it's probably uh not a good idea.
• 15:49
  SPEAKER_01: It's or it's it's not safe enough.
• 15:50
  SPEAKER_01: And it's worked really well.
• 15:52
  SPEAKER_01: And Matt and I, we've never had an argument.
• 15:53
  SPEAKER_01: You know, we've we we certainly don't agree on every every stock, or um, normally it's because we don't have exactly the same circle of competence.
• 16:01
  SPEAKER_01: It's very close and overlaps quite a bit.
• 16:04
  SPEAKER_01: Um, but there's at the margins, you know, I might be more comfortable with something, or Matt might be more comfortable with an industry than I am.
• 16:10
  SPEAKER_01: And so we just leave those alone, you know, and we we've been able to find plenty of ideas that we both agree.
• 16:15
  SPEAKER_01: And normally, if we talk every day, normally when when one of us finds something in in value line or something that we've read, it's usually on the other one's list the same day we found, and then we know that it's probably a good thing to you know to chase down because um we're both excited about it.
• 16:28
  SPEAKER_01: So it's a simple rule.
• 16:29
  SPEAKER_01: We just have to both, it has to be unanimous on a buy or a sell.
• 16:32
  SPEAKER_00: Yeah, makes sense.
• 16:33
  SPEAKER_00: You don't have to swing at everything.
• 16:35
  SPEAKER_00: So uh I mean that's that's uh that's a good balance.
• 16:38
  SPEAKER_00: You also mentioned in the in the letters, um, I believe it was called maximizing purchasing power.
• 16:45
  SPEAKER_01: Yeah, that's right.
• 16:46
  SPEAKER_01: Yep.
• 16:46
  SPEAKER_01: So it's it just just a way we we um we think of you know owning equities as a great way to offset you know inflation over time and generate excess growth above and beyond that.
• 16:59
  SPEAKER_01: And so it's it's protecting capital and growing you know after inflation.
• 17:04
  SPEAKER_00: That makes sense.
• 17:05
  SPEAKER_00: So I'd like to lean back on your private equity experience.
• 17:10
  SPEAKER_00: What are some of the lessons you carried over from private equity into the public market?
• 17:16
  SPEAKER_00: Um, is there anything the public markets could learn from the private equity firms, uh, the way they analyze or manage companies?
• 17:24
  SPEAKER_01: Yeah, certainly.
• 17:24
  SPEAKER_01: I think the the biggest thing that public markets could take away from private markets is the uh the focus on business, kind of long-term business metrics.
• 17:35
  SPEAKER_01: So it that's gonna vary by company, but there's always some measure of volume and some measure of quality that you need to keep your eye on.
• 17:45
  SPEAKER_01: And the the businesses that we worked with, you know, we didn't really worry about quarter-to-quarter like bottom line results.
• 17:52
  SPEAKER_01: Obviously, those are important, but it was more about if we're tracking the right long-term metrics for the business, then the financials are going to be fine.
• 17:59
  SPEAKER_01: And so the, you know, it's probably not surprising to hear me say that the the focus on a little bit longer term and even private equity isn't nearly as long-term focused as like we run equal point capital, but they're at least looking, you know, five, six, seven years out.
• 18:13
  SPEAKER_01: Whereas a lot of you know, public equity investors are looking, uh it seems like weeks, you know, in the future, but at most a quarter or two or a year, you know.
• 18:22
  SPEAKER_01: Um, so the longer you can look out, the the larger of a competitive advantage you have.
• 18:27
  SPEAKER_01: And anybody can do that, you know, it's just a mindset.
• 18:29
  SPEAKER_01: Um, so that you know that that's probably the biggest thing is the is because you're you when you do own businesses in a whole, you have to think about them as businesses and you have to focus on the business metrics.
• 18:39
  SPEAKER_00: Since you started your fund, do you feel uh restrained sometimes by when I talk about my investments?
• 18:46
  SPEAKER_00: I can look 20, 30, 4 years into the future and fair feel very comfortable owning a company.
• 18:52
  SPEAKER_00: I have no pressure to buy or to sell anything.
• 18:55
  SPEAKER_00: I can imagine with the added pressure of having shareholders, it I I I suppose it could kind of change the way you invest.
• 19:04
  SPEAKER_00: Has it, or is it not that bad?
• 19:07
  SPEAKER_01: Yeah, it definitely could, and that depends on your investor base.
• 19:12
  SPEAKER_01: We've been really lucky to have investors that uh kind of self-select into the strategy and so they understand the mindset by and large and have had almost no questions during any sort of you know periods of market turbulence because they get they get the approach, you know.
• 19:27
  SPEAKER_01: So if you have investors that are hounding you and are worried about, you know, why did our stocks go down today?
• 19:33
  SPEAKER_01: And they're calling and disrupting kind of the investment process, it's gonna be really hard to run a business that way.
• 19:39
  SPEAKER_01: And that certainly happens to people.
• 19:41
  SPEAKER_01: We've been fortunate just by way of the types of investors that we have to not have to you know kind of contend with that so far, but it's definitely a risk.
• 19:48
  SPEAKER_01: Um, so we try to be really mindful when we're bringing a new investor on that it's that it's uh a good fit for us and a good fit for fit for them, not just accepting you know capital from anyone.
• 19:59
  SPEAKER_01: And we've said no, you know, uh quite often um to people that we don't didn't feel were a good fit.
• 20:04
  SPEAKER_00: Okay, I'd like to talk about uh patience.
• 20:07
  SPEAKER_00: Um, I think in uh in some of the letters you've talked about patience or sitting still, and investing often rewards those who kind of move fast, at least in the short term.
• 20:20
  SPEAKER_00: Uh, me personally, I tend to avoid all IPOs, I tend to avoid crypto, uh AI stocks, everything that gets talked about way too much uh online.
• 20:30
  SPEAKER_01: Yep.
• 20:30
  SPEAKER_00: Um, but you've written about the value of sitting still, uh, which I really liked.
• 20:36
  SPEAKER_00: Sometimes I struggle with this because I mean news and social media is all around you.
• 20:40
  SPEAKER_00: So, how do you personally stay calm and hold your position when there's so much noise?
• 20:45
  SPEAKER_00: And to follow up on that, investing is about being contrarian, but you I mean, if you're wrong, it doesn't matter you were contrarian.
• 20:54
  SPEAKER_00: So, how do you kind of balance that?
• 20:57
  SPEAKER_01: Yeah, I I love that Howard Mark's quote, he says it a lot, is investing.
• 21:00
  SPEAKER_01: You have to be different and you have to be right.
• 21:02
  SPEAKER_01: You know, those are it's important.
• 21:04
  SPEAKER_01: You can't forget about the second part of being right.
• 21:06
  SPEAKER_01: Um, we'll I'll talk about the your first piece of the question first in terms of how to be patient.
• 21:10
  SPEAKER_01: I think um the the most important thing is to um one understand the stocks that you own.
• 21:19
  SPEAKER_01: If you understand the businesses behind those stocks, then you're you can be patient and take a long view if one of them isn't doing well.
• 21:25
  SPEAKER_01: The stock price is going down, you you need to look to the business, not necessarily to the stock price as to what to do.
• 21:32
  SPEAKER_01: And so if you understand what to track, you know, at a business level from your portfolio holdings, then you can you can look out you know over the short term noise.
• 21:41
  SPEAKER_00: And does that include valuations for you personally?
• 21:44
  SPEAKER_01: Yeah, yeah, absolutely.
• 21:45
  SPEAKER_01: So we we yeah, I mean, valuation is really important.
• 21:49
  SPEAKER_01: Um, and if you've if you've gotten the valuation right up front, you have a lot better chance of of not having to contend with a big drawdown, you know, right away, which inherently, no matter what, is gonna make things harder.
• 22:00
  SPEAKER_01: You can still you can still deal with that and it's still going to happen.
• 22:03
  SPEAKER_01: But it's so that's why it's so important to to we we like to say you can't you can't borrow conviction.
• 22:09
  SPEAKER_01: You have to build it yourself.
• 22:10
  SPEAKER_01: And so you have to do the work.
• 22:12
  SPEAKER_01: You can't just buy a stock because someone else is convicted in it.
• 22:16
  SPEAKER_01: You have to build the conviction within yourself in order to really hold through difficult periods which are inevitable in uh in the investment world.
• 22:24
  SPEAKER_01: The other piece is structuring your portfolio in a way that allows you to be patient.
• 22:30
  SPEAKER_01: And that to us is being you know quite concentrated.
• 22:34
  SPEAKER_01: So we own usually around 10, you know, 9 to 11 stocks at any given time with the goal to hold them for a really long period of time.
• 22:42
  SPEAKER_01: And if you know that you're only going to hold nine to 11, it forces you to be really picky and really choosy and to be patient about making any changes to your portfolio because it's a high bar to activity.
• 22:53
  SPEAKER_01: If you're going to put 10% of your net worth into something you want to wait until there's a an opportunity that's obviously you know a fat pitch.
• 23:00
  SPEAKER_01: And so by forcing yourself to be concentrated it it almost forces patience because you're gonna you need to be very selective.
• 23:09
  SPEAKER_00: The thing I struggle most with evaluation is such a such a weird thing where we value a company and you decide to either buy it or you don't but the thing I find particularly difficult is when you have a company and you hear what is it don't cut the flowers or let your winners run and whatever the quotes may be but at the same time if you look at a uh for example I would love to own a company like Azilor Luxotica or uh Netflix which I missed uh after analyzing it.
• 23:40
  SPEAKER_01: Yep.
• 23:41
  SPEAKER_00: But at the same time when I look at the valuation I don't think I made a mistake.
• 23:45
  SPEAKER_00: So when is the valuation so important that you sell and when do you let the valuation just get out of hand?
• 23:53
  SPEAKER_00: For example Costco has been expensive for 25 years and you could have sold 20 years ago and you missed uh I don't even know how the the gain it has now.
• 24:03
  SPEAKER_00: So how do you kind of think about that?
• 24:05
  SPEAKER_01: Yeah it's a it's a great question.
• 24:07
  SPEAKER_01: It's something we you know we think about a lot and don't certainly don't always get right.
• 24:11
  SPEAKER_01: Our framework for when to sell an investment because of valuation is if we believe the valuation gets to a point where it's gonna um the valuation multiple is likely to compress over the next five years enough that it will offset the business returns and the the returns from the stock therefore will likely be below our hurdle rate.
• 24:30
  SPEAKER_01: So a really good example is um Davida we used to own we owned Davita for a number of years we bought it kind of post COVID when they were had so I don't know if you know what DeVita is it's a dialysis business.
• 24:42
  SPEAKER_01: It's a duopoly in the dialysis space so they treat end stage you know kidney disease um so it's a very niche business.
• 24:49
  SPEAKER_01: It's a duopoly with Fresenius they they basically have a you know the dominant between those two um almost all of the market in the US and a little bit abroad.
• 24:57
  SPEAKER_01: So it's a it's a very um necessary business it's slow growth but um they do a ton of share repurchases it kicks off a lot of cash Bertrand Hathaway owns about 45% of the business um so anyways it it kind of fits the style of business that we like and we bought it in 2022 I believe it was when it was um very cheap so kind of they had a lot of issues coming out of of COVID a lot of their patient base died during COVID and so they had a kind of a reset of their you know of their patient base and anyways there was some scares with GLP1s and what that might do to you know to the the rate of kidney disorders and uh so we bought the stock it was it was very cheap it was you know a mid-single digit multiple of free cash flow there was a lot of room for error a lot had to go wrong to lose money you know at those prices the stock did draw down a little bit further because you know you can never bottom ticket but then it did well for the next couple of years and so into early 2025 the valuation was no longer you know um a mid single digit you know multiple it was more like mid to high teens and so to us given the growth profile of the business uh we thought it was really likely that that business was not worth uh a mid to high teens multiple it was likely a you know low double digit fare multiple because most of the returns came from yield and as your valuation multiple goes up your buyback yield goes down so the forward returns as a function of the valuation compressed to a point that we thought we had better ideas and so we sold it.
• 26:28
  SPEAKER_00: So opportunity costs come into play when valuation gets out of hand?
• 26:33
  SPEAKER_01: Yeah yeah 100% everything anytime we buy or sell, you know, we're weighing against our next best idea whether it's in the portfolio or out of the portfolio.
• 26:41
  SPEAKER_01: And if we have you know if we have positions that that are in the portfolio that offer better returns than anything else outside of the portfolio it doesn't make sense to to make a change you know um just because of valuation.
• 26:53
  SPEAKER_01: But you know we're we're we're very conscious of it.
• 26:55
  SPEAKER_00: Yeah I think you in one of the letters uh you talked about I think it was the fundamentals letter um where most positions get a 10% weighting right that's right yep so our goal is to to purchase um up to 10% of our cost in any position and we try to get them all there.
• 27:13
  SPEAKER_01: It doesn't always happen exactly.
• 27:15
  SPEAKER_00: Is that the maximum?
• 27:17
  SPEAKER_01: Yeah we won't go over 10% of cost.
• 27:19
  SPEAKER_01: We have several positions that are much larger than 10% but that's because they've compounded up to that.
• 27:24
  SPEAKER_01: Exactly yeah yeah not because we've and and we've we have a pretty we we have a a strict rule not to double down you know past that 10% level um because that's how we've seen you know really good investors um get in trouble if you because you you're not going to be right every time and if you continually double down and you end up being wrong you can really impair your capital.
• 27:44
  SPEAKER_01: But if you if you limit yourself to a 10% exposure you've inherently limited your you know your downside in any one investment.
• 27:50
  SPEAKER_01: So it's part of the risk control of running a concentrated portfolio.
• 27:53
  SPEAKER_00: Is there a thing such as the right amount of activity in a portfolio how do you think about the uh buy and sell frequency or um knowing knowing when to act versus when to stay put yeah that's a great question there there's no um there's no right answer or there's no target for any given year.
• 28:11
  SPEAKER_01: For us we've um we found that about 20% or so turnover is pretty natural for us but that's not because it's a target.
• 28:20
  SPEAKER_01: It's because that's the cadence at which we've been able to find new investments.
• 28:23
  SPEAKER_01: And there's there's no rhyme or reason you can't predict when you're gonna come across one but that's generally a couple of times a year is when we've made changes to the portfolio and it's all driven off of the opportunity set that we're seeing not not a goal that we have um and so when we find a new you know a new stock that um the forward returns with a high degree of confidence exceed our you know lowest current holding in terms of forward returns then that's when we make a change.
• 28:50
  SPEAKER_01: So it's it's strictly driven off of the opportunity cost and the opportunities that we're seeing.
• 28:54
  SPEAKER_01: During periods of of you know great market turbulence like during COVID during 2020 um to some extent during during the fall of 2022 we had heightened activity because we were seeing more opportunities um but it you know it just depends on on the the opportunity flow that you you know you're experiencing.
• 29:11
  SPEAKER_01: Can you give us some examples of companies you um you bought during the the covet crash yeah the my favorite one that we bought which we still own is auto zone and so we had we had followed auto zone for for a long time leading up to that and it uh it got to a point where the stock got so cheap that Matt and I I remember sitting on the phone talking about because autozone's stores were closed for a brief period of time and so the stock got really cheap because there was going to be no revenue you know for some period and we were actually looking at the financials saying how long can this company go with no revenue and we couldn't believe that we were asking ourselves this with a company like AutoZone, which has been one of the most you know steady and predictable businesses um that we've ever you know studied and we got comfortable that this this company was not going to go out of business.
• 29:56
  SPEAKER_01: You know that the the world was going to continue it was going to come back online.
• 29:59
  SPEAKER_01: If if AutoZone was closed for so long with no revenue then we had bigger problems in the world and we probably it probably wasn't going to matter anyways.
• 30:07
  SPEAKER_01: And so that was we bought that one during the the lows of you know of 2020 um and we still own it.
• 30:13
  SPEAKER_01: It's a great business it's not nearly as cheap as it was back then but it's it's a phenomenal business that still has good prospects.
• 30:19
  SPEAKER_01: So that's that's one example.
• 30:21
  SPEAKER_00: That has delivered a stellar return so far.
• 30:24
  SPEAKER_01: Yeah it's it that's that's a good one.
• 30:25
  SPEAKER_01: It's we always we always joke that people are you know looking for the next auto zone and it's like autozone's been the next auto zone for you know for a long time and it yeah there's a long way to go go with that one.
• 30:35
  SPEAKER_00: So yeah it has a well pun intended I guess a long uh runway but um exactly exactly I'd love to talk a little bit more about decision making in your most recent letter I believe uh from the fund you talk about the psychological experiment from the 1950s on independent thinking um where and I am quoting the letter here okay people often abandon their own judgment to align with group consensus even when the group is clearly wrong which brings me to my question how do you avoid falling for this yourself?
• 31:11
  SPEAKER_01: Yeah I think what what I mentioned earlier about not being able to uh borrow conviction from others you have to keep that at the front of your mind always and so if if you um take like the uh the semiconductor businesses you know of recent years we've read those reports and we've I I've read Nvidia's 10K I've read a lot you know a lot of those companies 10Ks and the stocks have done great and sure I wish that we would have been able to buy NVIDIA because it's gone up so much.
• 31:39
  SPEAKER_01: But at the same time I don't regret not owning that stock at all because I read the the report and I don't understand how to predict where that business is going to be in five to 10 years.
• 31:47
  SPEAKER_01: And so it's just not a it's not a fit for us.
• 31:49
  SPEAKER_01: And so there's no there's no envy you know on our part that we don't own something that other people talk about a lot or other people own because we just don't understand it.
• 31:58
  SPEAKER_01: And it comes comes back to that private owner mindset that if we don't understand the business well enough to own it for a decade, um, we just shouldn't buy any shares of it.
• 32:08
  SPEAKER_01: And so you just you have to always keep that lens and understand that there's always something that you will understand and there's enough opportunities out there that do fit your criteria that it's okay if you don't own every stock that's done well.
• 32:21
  SPEAKER_01: It's the same thing like you mentioned with Netflix.
• 32:23
  SPEAKER_01: It's a it's a great business we've never owned it we've admired it from afar because it's always been too optically expensive for us.
• 32:28
  SPEAKER_01: I think we do understand the business well enough but we don't regret not owning it because it just isn't it doesn't fit within the criteria that has worked well for us.
• 32:35
  SPEAKER_01: And so that's okay.
• 32:36
  SPEAKER_01: And other people can own it and make money off of it and we'll we'll make money off of other things.
• 32:40
  SPEAKER_01: I think the other the other piece that really helps is having a a partner.
• 32:44
  SPEAKER_01: And so uh a lot of people you know will we'll run an investment firm kind of you know largely as a one man show which which is great.
• 32:53
  SPEAKER_01: It's it's really helpful to have someone to talk to and to kind of have your you know we give each other some guardrails to uh to not stray and and kind of go along with the herd you know if you have a partner I think it helps a lot.
• 33:05
  SPEAKER_00: I like that I I think Buffett became a better investor due to Munger as well.
• 33:10
  SPEAKER_00: So it makes sense.
• 33:11
  SPEAKER_00: Absolutely yeah I think you uh you said you were on the merger and acquisition side or am I cor am I wrong?
• 33:19
  SPEAKER_01: Yeah we I did both.
• 33:21
  SPEAKER_01: So we did um I was on the the mergers and acquisition side and I also spent a lot of time with the existing portfolio.
• 33:26
  SPEAKER_01: So working with kind of the management teams of the portfolio companies okay given my my my previous background in engineering and operations I brought some of that lens and so it was fun to be able to see both um and and I see buying and selling companies is fun and and working with them is fun you know so it's a it was a flavor of of both sides.
• 33:44
  SPEAKER_00: Well we know that besides serial acquires uh most acquisitions fail or are capital destructive for shareholders.
• 33:53
  SPEAKER_01: What makes a great acquisition in your eyes and uh I mean to uh to monger it to invert it what is something you look at that might be a red flag when it comes to acquisitions yeah I think the biggest thing um is if there's no logical business fit uh to doing an acquisition if it's not clear how this existing business fits within the business that's acquiring it it's a major red flag so if it's if it's deworsifying essentially is or just unrelated then it optically looks like the management team is acquiring just because they don't know what else to do with the capital and they want to continue to grow.
• 34:34
  SPEAKER_01: And we'd rather have that capital come back to us as shareholders you know if that was if if if we owned a company like that.
• 34:39
  SPEAKER_01: On the flip side we owned Alimentation Kouchtard which is the owner of Circle K and you know one of the largest I think the second largest owner of convenience stores across the uh the the world and we've we've uh studied that business for a long time we owned it for a number of years and they're the opposite they are fantastic acquirers and they they have a very strict kind of playbook both in terms of valuation and then integration and they they wanted to buy 7-Eleven right they yeah they've been trying to buy 7-Eleven which I wouldn't be surprised if eventually they find a way to do it but they uh they haven't yet but that's their their playbook is to buy you know they do a lot of acquisitions of mom and pop and or small you know regional uh chains of of convenience stores and then integrate them into their into their infrastructure and they're really good at sourcing fuel their their cost their gross profit per gallon is way higher than the rest of the industry because their operational excellence is really strongly kind of rooted in their culture.
• 35:38
  SPEAKER_01: And so those acquisitions you when you combine the ability for them to become more profitable as a part of Alimentation Kouchard and their willingness to not overpay in general has worked out really well.
• 35:50
  SPEAKER_01: And so they're a great example of a serial acquirer that has stayed in their circle of competence they've not strayed uh too far.
• 35:57
  SPEAKER_01: They they they tried to buy a grocery store was the those is the one time uh I think it was a French uh grocery chain that was the one time when the the market reacted negatively because it it didn't make a whole lot of sense it wasn't totally different but it didn't fit within their typical acquisition pattern and and the stock drop that's when we bought it um when it became evident they weren't going to make that acquisition and then they they kind of stopped you know going down that path so um they did stray for a little bit but you know by and large they've they've stuck to their knitting and it's worked out really well.
• 36:28
  SPEAKER_00: It's uh we actually uh our analyst Luke uh analyzed the company I I think um late 2024 and I believe he owned it for uh a couple of months as well before deciding to sell but the the difference we realized after the analysis and after talking about it for hours that the consumer in America and the way these gas stations work and the way consumers behave are so different than uh Europe.
• 36:57
  SPEAKER_00: I'm I mean there is a supermarket here yeah I would argue anyone in the Netherlands can go on a bike and there will be a supermarket nearby within 10 or 15 minutes.
• 37:07
  SPEAKER_00: And uh so you don't need gas stations other than just to fill up the the tank.
• 37:11
  SPEAKER_01: Right.
• 37:12
  SPEAKER_01: Yes it's so different.
• 37:13
  SPEAKER_01: And I I believe Kuchtart makes a lot of money from the from the stores itself right they do yeah so so they're they are selling convenience obviously right as as a convenience store and it's it's so different here it's such a driving you know kind of society just because of the the physical space you know in the in the United States between between cities and things like that um that they've just carved out a great niche of and it's very profitable.
• 37:39
  SPEAKER_01: You know you can sell candy bars at the convenience store for a higher margin than at the grocery store because it's they're low you know it's a low ticket item and so people aren't going to mind if it's a couple cents higher.
• 37:48
  SPEAKER_01: And so they're it's very profitable and then they make a lot of money on the on the fuel side as well.
• 37:53
  SPEAKER_01: And you know that's that's likely to continue for a long time kind of regardless of what happens with electric vehicles.
• 37:59
  SPEAKER_00: Yeah and and and besides I mean europeans and especially uh Dutch people are very picky and whenever the price is like 10 or 20 cents higher somewhere they'll they'll they'll complain about it and don't buy it.
• 38:12
  SPEAKER_01: Out of principle right right yeah we don't we don't have quite the the same amount of discernment for for low ticket items it seems like in the US for better or worse yeah it's worked out well for for you know elementation kush tard and dollar general and things like that.
• 38:26
  SPEAKER_01: If if you had to make an educated guess how far away is uh is uh is a supermarket for the average american um it depends on kind of the type of supermarket but if um a lot of rural towns in in America and there are a lot of them might be 20 minutes away you know a 20 minute drive from a a Walmart or another super center like that if you live in the in the city you know you're only a couple of miles away from from a a grocery store but if you if your focus is more on serving the rural customer kind of out in the country that's not anywhere near a large city um you you could easily be you know 30 minutes from the nearest uh grocery store.
• 39:07
  SPEAKER_00: Okay.
• 39:08
  SPEAKER_00: It's not that it's not as bad as I would have guessed.
• 39:10
  SPEAKER_01: But uh it's it's not like you're an hour away you know but um it's certainly it's not it's not like a lot of people in the US can just pop over and and be at a a Walmart or a Kroger or a you know Costco.
• 39:24
  SPEAKER_00: Yeah it's just something I I've been thinking about lately.
• 39:27
  SPEAKER_00: Uh I might even do an episode or uh an article on it but uh the difference between consumers I mean for example one of our uh one of my friends is going to analyze a Starbucks and the way consumers in Europe behave compared to the United States is just so different.
• 39:44
  SPEAKER_00: The the culture of getting a coffee in the morning or uh grabbing some food uh at a Starbucks here Starbucks is kind of like a a luxury item almost where you just get it every now and then maybe every couple of weeks you just get a coffee and then because it's expensive and we just get our coffee from home.
• 40:06
  SPEAKER_01: Yeah.
• 40:07
  SPEAKER_00: Like I said the gas station difference and the way people the con it's just interesting to think about although we're all Western countries the way consumers behave uh it's just it's just fascinating uh to me.
• 40:21
  SPEAKER_01: I I would love it if you do an episode on that.
• 40:23
  SPEAKER_01: That would be one I'd love to listen to because it it's something we think about a lot and it's it's a reason that you know 80% of our investments are in the US because we just understand the the society more.
• 40:34
  SPEAKER_01: We do have some investments in Europe that are that are primarily European focused but it it has to be things that really translate you know across borders um in a predictable way and there's not that many businesses that are like that.
• 40:45
  SPEAKER_00: Because actually it's one of the reasons sometimes I don't invest in American companies because I don't know how ingrained the company is into the culture and the way people behave with the company and sometimes it makes me hesitant.
• 40:58
  SPEAKER_00: For example Portillos is a great example I think everything besides the pretty leveraged balance sheet is uh very interesting to me but I just don't know how good the food is and how well the Chicago style food will translate into the rest of America for example I think this is just a a prime example of why I I am hesitant sometimes of um American companies yeah I agree and I actually agree with with your thoughts and I live in America on Portillos I've never been there and I don't you know I wouldn't be able to predict how well that's going to do outside of the core market.
• 41:33
  SPEAKER_01: Obviously they've they've got a great local brand or kind of regional brand and and who knows how that'll translate to you know to Texas and and California and wherever else they end up opening.
• 41:42
  SPEAKER_01: Maybe it works great and it does translate but it's good it's it's exactly the question to ask and I I'm not sure you know how to think about that.
• 41:49
  SPEAKER_00: You'll have to ask your partner and let me know.
• 41:51
  SPEAKER_01: I know he likes Portillos yeah I'll have to he'll have to get his insights on it.
• 41:54
  SPEAKER_00: Yeah definitely in your letters you talk about and I've never heard these two words next to each other strategic mediocrity and it says merely good results with a focus on consistency and longevity.
• 42:09
  SPEAKER_00: How do you do that and how did you come up with it?
• 42:11
  SPEAKER_01: Yeah that's been one of one of my favorite um kind of one of my favorite insights that we've we've learned from others is you don't have to swing for the fences or you don't have to do extraordinary things to get extraordinary results if you're given enough time.
• 42:27
  SPEAKER_01: And so we the analogy we like to use and you you maybe you've seen this this post but is that of a snowball rolling down a hill.
• 42:35
  SPEAKER_01: And so this the if your goal as an investor is to have as big of a snowball as possible at the end of the hill you can either choose a hill that um is very steep and you might get down the hill faster and it might pick up a lot of snow in the process or you can choose a hill that's maybe a little bit less steep but is very very long and gives you a long time to pick up snow and make that snowball really large at the end of the hill.
• 43:00
  SPEAKER_01: And the slope is your rate of return.
• 43:03
  SPEAKER_01: So if you have a hill that's and of course the best outcome is a steep slope and a long hill but I just I've not seen you know outside very rare outliers those that have been able to generate you know 25% returns for multi decades.
• 43:17
  SPEAKER_01: They're out there it's it's possible it's been done I'm not sure it's repeatable so we've elected to say you know we don't need to swing for the fences we don't need to aim for 25% annual returns for you know for 25 years.
• 43:30
  SPEAKER_01: If you can generate you know low to mid teens annual returns and sustain that for two decades to 25 years, the results are astounding at the end of the day.
• 43:41
  SPEAKER_01: And so if you're if you focus on not having disasters and which by the way a lot of times accompany investments that you think are going to do 25 30% a year, there's usually risk with those and you're at risk of impairing your capital or as we you know like to think of it, your snowball flying off the hill.
• 43:59
  SPEAKER_01: That's What you don't want to have happen.
• 44:01
  SPEAKER_01: So if you focus on a narrower range of outcomes that are still good, and you can sustain that narrow range of outcomes that's above average for a very long period of time, you're going to have a really good result at the end of the day.
• 44:12
  SPEAKER_01: And it keeps you out of trouble in the meantime.
• 44:15
  SPEAKER_01: And so, for instance, if you can just earn, you know, if you earn 13% for a couple of decades, you know, you're going to make 20 times your money.
• 44:22
  SPEAKER_01: And that's a that's a good result, as opposed to, you know, maybe a higher rate of return for a shorter period of time with more risk.
• 44:30
  SPEAKER_00: You're basically saying we're not looking for that single needle in a haystack.
• 44:35
  SPEAKER_00: We'll just look around the haystack and try and find um all kinds of gold nuggets which will do very, very well in the long run instead of finding that one little thing that just does insanely well.
• 44:51
  SPEAKER_01: That's exactly right.
• 44:52
  SPEAKER_01: And I I like it's not repeatable.
• 44:54
  SPEAKER_00: The other one, the other is not repeatable, right?
• 44:56
  SPEAKER_01: Exactly.
• 44:56
  SPEAKER_01: I I like to use the example of um everybody knows Nick Sleep, and he's done so well, and it was a phenomenal, you know, success story.
• 45:04
  SPEAKER_01: But I tell people, don't try to become the next sleep Nick Sleep.
• 45:08
  SPEAKER_01: Because he found Amazon and Costco and Berkshire Hathaway, and that was great, and it worked unbelievably well.
• 45:14
  SPEAKER_01: And there's a reason that he earned such high returns, but that's he's the only one that found those three.
• 45:19
  SPEAKER_01: And so if you're if your goal is to become the next Nick sleep, you're probably there's a lot of people that tried to become the next Nick Sleep that failed and be and blew up or had bad returns, right?
• 45:28
  SPEAKER_01: Because it's it's uh arguably not repeatable, at least for the vast, vast majority of people.
• 45:34
  SPEAKER_01: And so we don't try to become the next, um, that next next sleep, you know, because because the outcomes can still be great without without aiming for you know for finding the one company, the one next Amazon, because we just don't think our odds are very good of finding that, but we can find things that are gonna do do pretty well.
• 45:50
  SPEAKER_00: Walk us uh through your process from finding an idea.
• 45:54
  SPEAKER_00: Where do you look for your ideas and uh what needs to happen before buying or selling it?
• 45:59
  SPEAKER_01: Yeah, good question.
• 46:00
  SPEAKER_01: So we um our kind of top of the funnel idea generator is we read value line every week.
• 46:06
  SPEAKER_01: So the value line review.
• 46:07
  SPEAKER_01: I'm not sure if you've heard of it.
• 46:09
  SPEAKER_01: It's been around um since the early 1900s, you know, more than 100 years, and it's just it's an investment publication.
• 46:16
  SPEAKER_01: Most people can get it free through their through the you know, a library with an online subscription, or you can pay for it.
• 46:22
  SPEAKER_01: But what value line is is it runs through about I think 2,500 companies per quarter, and then it repeats those um every quarter.
• 46:32
  SPEAKER_01: There's a there's a hundred to a hundred and twenty-five companies per week in the issue, and there it's one page per company, and they group it by industries.
• 46:40
  SPEAKER_01: So you might have the airline industry, the bank industry, and oil and gas or something, you know, in in one given week.
• 46:48
  SPEAKER_01: And there's a one-page review of each company that value line covers, and it there's charts uh of the last 15 years of financials.
• 46:56
  SPEAKER_01: So you can see sales, you can see share count, you can see return on capital, return on equity, debt levels, you know, there's there's like 15 metrics and a chart that that shows the stock price.
• 47:06
  SPEAKER_01: And then there's a couple paragraphs about what's happened in that company over the last um quarter since they last you know covered the company.
• 47:14
  SPEAKER_01: And so we read that every week.
• 47:16
  SPEAKER_01: And so if you see, if you're seeing a couple thousand pitches per quarter and you see those same couple thousand pitches every quarter, you get to know a lot of companies pretty well.
• 47:24
  SPEAKER_01: And there's usually in any given week, maybe two or three you know, opportunities that jump out that look interesting because something's happened over the last quarter, the stock price has dropped, or the there, the companies announced some you know, corporate transaction, or for whatever reason, there there might be a handful um that look interesting, and we'll take those or read value line on Monday, and then you come out with a couple of things to do for the rest of the week.
• 47:49
  SPEAKER_01: And so then you go and whatever companies look interesting, go read the latest 10K, go read the last couple of transcripts, and start to just start to go down the rabbit hole.
• 47:59
  SPEAKER_01: And of the of that funnel, you know, a couple per year end up um, you know, becoming investments in the portfolio.
• 48:05
  SPEAKER_01: But that's how it starts.
• 48:06
  SPEAKER_01: And then we also find ideas from you know just reading the Wall Street Journal and reading Barons and things like that, um, reading other people's blogs, 13F's, you know, that there's a whole variety of areas that um that you can get ideas from.
• 48:18
  SPEAKER_01: But then usually the first place we go is value line.
• 48:21
  SPEAKER_01: Go update ourselves on what's going on with the company, and then go to the the company's filings and and reports and presentations um to build an understanding of the company.
• 48:28
  SPEAKER_00: Interesting.
• 48:29
  SPEAKER_00: Never heard of it before.
• 48:31
  SPEAKER_00: I don't really know what I think of it.
• 48:33
  SPEAKER_00: Uh, I mean it's kind of I don't like looking at all, for example, a lot of people use screeners.
• 48:39
  SPEAKER_00: I kind of uh have a love-hate relationship with it.
• 48:42
  SPEAKER_00: We don't because everybody can see like the the the statistics and filter on uh high returns on uh invested capital and stuff like that.
• 48:50
  SPEAKER_00: So you really need to do the work afterwards, right?
• 48:54
  SPEAKER_01: Yeah, I I've not found any value in screeners, you know, really.
• 48:58
  SPEAKER_01: Um and with value line, and I think there's a reason I think Charlie Munger has said a couple times the last thing he would give up is value line.
• 49:06
  SPEAKER_01: And through the day he died, he's still he still read value line every week.
• 49:09
  SPEAKER_01: Um him and him and Buffett will talk about it periodically during if you listen listen to meetings.
• 49:14
  SPEAKER_00: So who who write these pitches or these uh reviews?
• 49:18
  SPEAKER_01: So the value line review is just a it's just a company, like you know, like any like Barron's or any investment research company.
• 49:24
  SPEAKER_01: Okay, and they have analysts that follow you know these businesses, and we don't pay attention to the to the ratings that they give them, or they'll they'll say which ones they think are timely or which ones are, you know, we don't pay attention to any of that.
• 49:36
  SPEAKER_01: We just we just use it to um keep up on the investment of of stocks that are out there or the the universe of stocks that are out there.
• 49:44
  SPEAKER_01: Um and it just it helps us generate you know initial ideas to go investigate further, you know, from a primary point of view.
• 49:52
  SPEAKER_00: Oh, I see, I see.
• 49:53
  SPEAKER_00: Yeah, it's it's it's the it's the very beginning.
• 49:55
  SPEAKER_00: So let's say you find something in um in value line and uh you read about the business model and you think it's interesting, and some of the metrics look pretty good to you.
• 50:05
  SPEAKER_00: What happens next?
• 50:06
  SPEAKER_01: Yep.
• 50:07
  SPEAKER_01: So then we we start to really try to dig into the numbers and understand what are the forward rates of return for the business.
• 50:13
  SPEAKER_01: And that we kind of talked about it earlier, but our framework is yield plus growth plus change in valuation multiple.
• 50:20
  SPEAKER_01: And so we have to build a bottoms-up understanding of the business uh as to what we think each of those components are gonna be in order to come up with what we we think our prospective returns would be if we own the stock.
• 50:31
  SPEAKER_01: And so yield is usually the easiest.
• 50:33
  SPEAKER_01: Like I said, it's it's understanding the free cash flow of the business, you know, the capital requirements of the business, how that will be sustained over time, and in relation to your purchase price.
• 50:43
  SPEAKER_01: And so that's and then how much of that cash are we gonna get back, you know, um, via capital allocation for share repurchases and dividends.
• 50:50
  SPEAKER_01: It gives us a base um, you know, yield component of our forward returns.
• 50:55
  SPEAKER_01: And then we look to growth.
• 50:56
  SPEAKER_01: Usually growth um is a function of how much capital the company can retain and the um the return that they earn on that retained capital.
• 51:06
  SPEAKER_01: So we call it incremental return on incremental capital.
• 51:09
  SPEAKER_01: And so the the pri the product of that and the percentage of operating cash flow that's retained, that's gonna be your growth component.
• 51:16
  SPEAKER_01: Um, that's how the business, you know, that's how the intrinsic value should grow over a multi-year period.
• 51:22
  SPEAKER_01: And so you have your yield, you have your growth, and then you have your valuation.
• 51:26
  SPEAKER_01: And so we like to valuation is the most fickle, you know, piece of the equation.
• 51:30
  SPEAKER_01: It's the most important over a one-year period.
• 51:33
  SPEAKER_01: It's not as important over 10-year periods if you're, you know, if you're correct about the business.
• 51:37
  SPEAKER_01: But we like to say, you know, we like to buy businesses whose valuation multiple is more likely to go up than down.
• 51:43
  SPEAKER_01: And how do we do that?
• 51:45
  SPEAKER_01: We buy businesses for around 10 times our estimate of kind of you know normalized free cash flow.
• 51:50
  SPEAKER_01: And if it's a good business that's growing and you have a double-digit base return, the valuation is usually, yeah, it provides you a margin of safety, you know, in case you're wrong.
• 51:59
  SPEAKER_01: And and we like less than 10 times, right?
• 52:01
  SPEAKER_01: We we'd rather buy you know a mid-single-digit free cash flow multiple.
• 52:04
  SPEAKER_01: And we we found a few of those recently.
• 52:06
  SPEAKER_00: So well, impressive.
• 52:07
  SPEAKER_00: I mean, uh markets are pretty expensive from the looks of it.
• 52:11
  SPEAKER_00: Do you talk with uh management before um investing or any qualitative research you do?
• 52:17
  SPEAKER_01: Yeah, very infrequently.
• 52:18
  SPEAKER_01: Um we have, you know, before we've talked to investor relations and and management before.
• 52:23
  SPEAKER_01: We've we've not gotten a whole lot of value out of it because you know, you know that they're gonna tell you that it's a good business and then that it's a good investment, but we we prefer to look at the track record of management and what they actually do with the cash and the results that they've delivered.
• 52:36
  SPEAKER_01: Yeah.
• 52:37
  SPEAKER_01: And it's and that that's our our you know, our and and the proxies, right?
• 52:41
  SPEAKER_01: Of the what are the incentives?
• 52:42
  SPEAKER_01: That's important.
• 52:43
  SPEAKER_01: Um, but we don't spend a lot of time.
• 52:45
  SPEAKER_01: We we talk to other investors, we don't spend a lot of time talking to management.
• 52:48
  SPEAKER_01: We just we think it's it's not it's not the best use of our time.
• 52:51
  SPEAKER_00: Okay.
• 52:52
  SPEAKER_00: And how long does the research process usually take?
• 52:55
  SPEAKER_01: It depends on the company, but because we're generally, you know, we gravitate towards simpler businesses, we can we can usually, you know, from um the time that we really start digging in, it might be a couple of weeks, you know, before we get comfortable with the business.
• 53:09
  SPEAKER_01: Anytime we buy a stock, we make sure to to write it up on our you know on our blog first, because we found that you know, if we can't communicate the thesis clearly and simply in writing, um, we don't understand it well enough and there's something missing, um, or we can't articulate you know the risks well enough.
• 53:25
  SPEAKER_01: So we always that's part of our process is is do the research, uh, write a blog about it, because we were doing this to ourselves you know internally beforehand.
• 53:33
  SPEAKER_01: We thought we might as well publish these blogs because we're already writing them.
• 53:36
  SPEAKER_01: Um, and then you know that then we might be ready to buy it.
• 53:40
  SPEAKER_00: Let's um let's zoom out for a second.
• 53:42
  SPEAKER_00: There is a lot going on.
• 53:44
  SPEAKER_00: Um when we are recording this, there is all this stuff going on with Russia, Ukraine.
• 53:49
  SPEAKER_00: You have um, I don't know if you if you like it, what I'm going to say, but you have a madman in the White House, you have uh there's a the China-US relationship that is being um put under pressure, you have Taiwan that is I mean, there is so much going on.
• 54:06
  SPEAKER_00: You have Israel, and what do what is your overall feeling?
• 54:11
  SPEAKER_00: Does does all of this matter for the stock market in the really long run?
• 54:15
  SPEAKER_00: And do you have a feeling that the returns over the next decade will be better, worse, the same as before?
• 54:23
  SPEAKER_01: Yeah, I mean, as you as you probably gathered, we're not really macro people, and we don't um we don't ever make bets on you know what's going to happen in the macro and and have to you know be right about the macro in order for our investments to work.
• 54:36
  SPEAKER_01: Um, so what we do is we we really focus on businesses that have a as as minimal of an impact, you know, from a macro standpoint as possible.
• 54:45
  SPEAKER_01: And that that takes the form of you know royalty businesses, uh non-discretionary businesses, recurring revenue businesses, subscription businesses, things like that that that just it doesn't really matter what interest rates are, it doesn't really matter what unemployment is uh broadly, right?
• 55:02
  SPEAKER_01: There's some that are a little bit more cyclical than others in our portfolio, but we really try to focus on companies that control the majority of their inputs and outputs and have a limited impact of extrinsic factors, you know, as possible.
• 55:14
  SPEAKER_01: Every business, you know, is is to some degree affected by what's going on in the macro, but we just look to minimize it so we don't have to make predictions one way or the other.
• 55:22
  SPEAKER_01: That being said, I think it's highly likely that the prospective returns for indexes are not as good over the next 10 years as they've been over the last 10 years, um, simply because they've done so well over the last 10 years.
• 55:33
  SPEAKER_01: And at some point the math doesn't work to continue, you know, compounding at that rate for indices.
• 55:39
  SPEAKER_01: But I have no idea.
• 55:40
  SPEAKER_01: You know, maybe they will maybe they will.
• 55:41
  SPEAKER_01: It's happened before.
• 55:42
  SPEAKER_01: Um, the Japanese stock market went to an absurd multiple earnings in the late 80s, and you know, maybe that'll happen in the US over the next 10 years.
• 55:50
  SPEAKER_01: And if it happens, you know, we're we're just gonna keep doing what we're doing anyways, and and we kind of ignore that noise.
• 55:56
  SPEAKER_01: Um, but you're right, there's there seems to be an unusual amount of volatility going on in the geopolitical landscape, and um, we realize we can't do anything about it, and so the only thing we can do is focus on finding businesses that that should be minimally impacted, you know, from all that.
• 56:11
  SPEAKER_00: Let me be completely honest here.
• 56:13
  SPEAKER_00: I have always appreciated and agreed with Buffett's saying of don't don't bet against America, but for the first time, I kind of feel like Trump has hurt trust so much that this might be the fuel that was needed for China and Europe to become less dependent uh on the United States of America.
• 56:36
  SPEAKER_00: Um, I don't know how much um news you're getting from Europe, but Europe has said that they are looking for ways to become more independent and work more with China and less with America.
• 56:49
  SPEAKER_00: They want to get kind of kind of get rid of Microsoft, they want to get off the US cloud, they and they're incentivizing European companies like never before.
• 57:01
  SPEAKER_00: Um, and Europe has always been like a a scattered piece, a scattered bunch of little little countries, but for the first time there's like unison.
• 57:11
  SPEAKER_00: And I don't know, I I think Trump might have really shot themselves in the foot for the first time, where China and Europe will start doing more themselves.
• 57:22
  SPEAKER_00: And I mean, I can imagine I can see a world where we are less dependent on America today than uh uh uh 10 years from now.
• 57:30
  SPEAKER_00: Yeah.
• 57:31
  SPEAKER_01: Yeah, I I mean I and I hope I hope that's not you know the outcome because I I would love to be yeah, as close to our historical allies as as we've been in the past, but I could see a scenario where you're right, you know, it's it certainly is is plausible, and it may have so you know, it may have sounded crazy um even a couple of years ago, but I don't think it sounds crazy, you know, now and and I believe that that's you know it's definitely a possibility.
• 57:53
  SPEAKER_01: And again, it comes back to you have to be careful about what you own, um, knowing the risks of of delinkage, you know, uh of not just the US and and some European nations, but but just all around the world, you know, it just seems like that's that's kind of the trend.
• 58:08
  SPEAKER_01: And you have to be aware of it.
• 58:09
  SPEAKER_01: Again, I I wouldn't make a bold prediction one way or the other and bet the outcome of my portfolio on it.
• 58:14
  SPEAKER_01: Um, but it's something at the margins that people need to be really, you know, really thoughtful about.
• 58:19
  SPEAKER_01: And it goes back to understanding the earnings power of the businesses that you own, what's the source of it?
• 58:24
  SPEAKER_01: How sustainable is it?
• 58:26
  SPEAKER_00: Let's do some th some some rapid fire, I like to call it.
• 58:29
  SPEAKER_00: Let me ask you a couple of questions, and um you you just gotta give your gut feeling, your gut answer on it.
• 58:37
  SPEAKER_00: And uh there's no wrong or right, but just uh just out of curious curiosity.
• 58:41
  SPEAKER_01: Sure.
• 58:42
  SPEAKER_01: Okay.
• 58:42
  SPEAKER_00: What is your favorite company in the world, valuation aside?
• 58:46
  SPEAKER_01: Favorite company in the world, valuation aside.
• 58:48
  SPEAKER_01: I well, I I'm biased because we own it, but I I love Brookfield Corporation.
• 58:54
  SPEAKER_01: Um, so they own Oak Tree Capital, it's an alternative asset manager.
• 58:57
  SPEAKER_00: Yeah, we know it.
• 58:58
  SPEAKER_01: Yeah, it's a royalty business, they invest in infrastructure.
• 59:01
  SPEAKER_01: Yep, Brookfield, I I I love Brookfield.
• 59:03
  SPEAKER_01: I also like the valuation, but business model, it's one of my favorites.
• 59:07
  SPEAKER_00: So if you had to put all your all your funds money in a single company, that would be Brookfield or Yeah, I'd be okay with Brookfield.
• 59:13
  SPEAKER_01: Um, there's there's a number in our portfolio that I would be okay with with our entire with my entire portfolio in.
• 59:19
  SPEAKER_00: I see.
• 59:20
  SPEAKER_00: What's your favorite CEO?
• 59:22
  SPEAKER_00: Or who rather?
• 59:23
  SPEAKER_01: Well, I I'd say I don't know, he's not the CEO anymore, but I love Howard Marks.
• 59:28
  SPEAKER_01: You know, he's uh Buffett's the default answer for most people, and I I love Buffett, but um, I just think the thoughtfulness of Howard Marks is and the way he communic communicates, the way he he talks about risk, um, he's the best.
• 59:41
  SPEAKER_01: And so he's he's one of my heroes.
• 59:43
  SPEAKER_01: Um, and so he's the you know the longtime leader of Oak Tree.
• 59:46
  SPEAKER_00: Favorite brand in the world?
• 59:49
  SPEAKER_01: Right now, it would have to be uh Rolex because of our we we own a Rolex dealer, and it's I've learned a lot about the luxury space, and you know, it's it's kind of amazing.
• 1:00:00
  SPEAKER_01: Um, there's a great book called The Luxury Strategy that I'd highly recommend for anybody um that's studying that space.
• 1:00:06
  SPEAKER_01: And to see the longevity of some of these luxury brands, Hermes, Rolex, um, it's it's phenomenal.
• 1:00:12
  SPEAKER_01: Ferrari, you know, it's it's just so powerful.
• 1:00:15
  SPEAKER_01: And so one of those, you know, I'd have to go with.
• 1:00:18
  SPEAKER_01: Um, otherwise, Ferrari, yeah.
• 1:00:20
  SPEAKER_00: I don't know if you've checked out um our podcast or our uh luxury industry report.
• 1:00:26
  SPEAKER_00: It's uh it's one of the industries I am most fascinated about.
• 1:00:29
  SPEAKER_00: So I think I've got like four deep dives into the luxury industry and a couple uh research reports on uh several luxury companies.
• 1:00:36
  SPEAKER_00: So if you're interested, absolutely I'll I'll make sure to uh to share them with you after the uh the episode.
• 1:00:42
  SPEAKER_01: Yeah, I'd love that.
• 1:00:42
  SPEAKER_01: It's it's a fascinating space.
• 1:00:44
  SPEAKER_00: Pepsi or Coke?
• 1:00:46
  SPEAKER_01: Coke.
• 1:00:47
  SPEAKER_00: Coke?
• 1:00:47
  SPEAKER_01: Yep.
• 1:00:48
  SPEAKER_01: I grew up with it, and uh yeah, I'm not a big Pepsi fan.
• 1:00:52
  SPEAKER_00: I see.
• 1:00:52
  SPEAKER_00: You're I mean you're a I I think you're a Buffett fan, so you can't really say anything else, right?
• 1:00:56
  SPEAKER_01: That's true.
• 1:00:57
  SPEAKER_01: I did like Coke before I knew who Warren Buffett was, but yeah, it's only reinforced it.
• 1:01:01
  SPEAKER_00: I see.
• 1:01:03
  SPEAKER_00: What's the hardest part of your job?
• 1:01:06
  SPEAKER_01: I think the um ability to to stay patient is always a challenge.
• 1:01:11
  SPEAKER_01: And it's it's a it's an intellectual challenging exercise to know that you're not gonna have a lot of activity, you know, throughout the course of a year.
• 1:01:19
  SPEAKER_01: And so how do you deal with that?
• 1:01:21
  SPEAKER_01: And so the blog has helped us a lot by writing and having a consistent output, even if we're not buying and selling every week.
• 1:01:28
  SPEAKER_01: It feels like you know, it makes you feel like you're making progress, and it's a tangible, you know, outcome that has helped us stay patient in managing the portfolio because it's difficult.
• 1:01:39
  SPEAKER_01: Even though we know it's the right way to behave, it still is challenging.
• 1:01:41
  SPEAKER_01: And so that's that's probably the hardest.
• 1:01:43
  SPEAKER_00: What's an industry you'll never invest in?
• 1:01:46
  SPEAKER_01: I cannot see us investing in technological hardware that changes quickly, like semiconductors, but anything that um is can be rapidly displaced, um, is is just not something I see us ever owning.
• 1:02:02
  SPEAKER_00: So um that includes ASML or Taiwan semiconductor?
• 1:02:07
  SPEAKER_01: We've thought about Taiwan semiconductor before and have become close.
• 1:02:13
  SPEAKER_01: We understand that more than the primary um kind of components, but it's still as difficult because it's still the capital intensity is is unbelievable.
• 1:02:23
  SPEAKER_01: And they do have a huge lead now, but I'm not sure it'll be like that in 10 years.
• 1:02:28
  SPEAKER_01: It probably, but it's very hard to predict.
• 1:02:31
  SPEAKER_00: What's something um you hope people will say um about you as an investor 50 years from now?
• 1:02:38
  SPEAKER_00: Let's say you beat um you achieve what you want to achieve.
• 1:02:41
  SPEAKER_00: Let's say you achieve 15% annualized returns for the next 40 years.
• 1:02:45
  SPEAKER_00: Yep.
• 1:02:46
  SPEAKER_00: What do you hope people say about you?
• 1:02:48
  SPEAKER_01: I'd like to I'd like to hope that they learned how to look at the stock market, how to look at stocks in a rational way, and how to be very patient and and to think for themselves.
• 1:02:59
  SPEAKER_01: I'd like to, if if that can rub off on on people, that would be a good outcome.
• 1:03:04
  SPEAKER_00: Awesome.
• 1:03:05
  SPEAKER_00: I always end with this question, uh, because I think it has a lot of value in it.
• 1:03:11
  SPEAKER_00: If you had to leave our listeners with a single practical lesson about investing, something they can take with them in the long run, what would uh what would it be?
• 1:03:21
  SPEAKER_01: I I I mean I mentioned it earlier, and I think it would be that you don't have to do extraordinary things to get extraordinary results, and you don't need you don't need to invest in the next Amazon or the next NVIDIA to have an outstanding outcome.
• 1:03:36
  SPEAKER_01: And so stick to businesses that you understand, stick to things that you would be happy to own in whole, and you're gonna be okay.
• 1:03:44
  SPEAKER_01: You don't need to swing for the fences.
• 1:03:46
  SPEAKER_01: There's lots of opportunities out there that fit your personality, and some people's everyone's personality is different, everyone's you know, circle of competence is different.
• 1:03:54
  SPEAKER_01: And it's I think the most important thing in investing is to stick to things that you understand.
• 1:03:59
  SPEAKER_01: That if if I could tell people one thing, it would be stick to things that you understand.
• 1:04:03
  SPEAKER_00: I think that's very useful.
• 1:04:05
  SPEAKER_00: I I have nothing to add there.
• 1:04:07
  SPEAKER_00: Dan, thank you so much for coming on the show, taking the time to do this.
• 1:04:11
  SPEAKER_00: I I really appreciate it.
• 1:04:12
  SPEAKER_00: I know you're a you're a busy man, and there's a lot of other things you could do.
• 1:04:16
  SPEAKER_00: So thank you so much.
• 1:04:18
  SPEAKER_00: And um, I'm looking forward to reading all the future letters you're writing.
• 1:04:22
  SPEAKER_00: I I really enjoy them.
• 1:04:24
  SPEAKER_00: Where can people find you and learn more on the fund or uh learn more on you, on the investing style you have?
• 1:04:31
  SPEAKER_01: Yeah, well, thanks for having me on.
• 1:04:32
  SPEAKER_01: I had a great time talking with you and look forward to staying in touch.
• 1:04:35
  SPEAKER_01: Uh, as far as getting a hold of us, our our website is egopointcap.com, and my email is dan at eagopointcap.com, and Matt's email is matt at egopointcap.com.
• 1:04:47
  SPEAKER_01: So feel free to reach out.
• 1:04:48
  SPEAKER_01: And we also have a substack.
• 1:04:50
  SPEAKER_01: If you just Google, you know, ego point capital substack.
• 1:04:53
  SPEAKER_01: That's where we we write.
• 1:04:54
  SPEAKER_01: We have free articles, we have some premium articles.
• 1:04:57
  SPEAKER_01: Um, but we'd love love for anyone to reach out and and uh talk further.
• 1:05:01
  SPEAKER_00: It's a great sub stack.
• 1:05:03
  SPEAKER_00: I'll make sure to put all the um information in the description and anywhere else we post this uh this interview.
• 1:05:10
  SPEAKER_00: Thank you so much, Dan.
• 1:05:12
  SPEAKER_00: And uh I really hope to talk to you again sometime.
• 1:05:14
  SPEAKER_00: There were a few things that I I didn't know and uh learned about, which uh which is why I love doing this so much.
• 1:05:20
  SPEAKER_00: And uh let's uh let's stay in touch.
• 1:05:22
  SPEAKER_01: Yeah, enjoy the discussion.
• 1:05:23
  SPEAKER_01: We'd be happy to come out again at some point in the future.
• 1:05:26
  SPEAKER_01: So thanks.
• 1:05:26
  SPEAKER_00: Awesome.