I'm a former CPA, now full-time, private investor searching for talented operators, clean capital structures & scalable growth. I don't invest in "cigar butts" or subscribe to conventional investing wisdom. I'm also a hiker, hooper and writer in the beautiful Pacific Northwest.
My investment philosophy is similar to how I live my life: acquire a few high-quality possessions at the right price [and don't be afraid to pay up for quality], minimize clutter and maintain flexibility. If I had to sum up my investment approach in one paragraph, I'd say that I follow Charlie Munger's "surfing" model where he posited:
And when these new businesses come in, there are huge advantages for the early birds. And when you're an early bird, there's a model that I call "surfing" — when a surfer gets up and catches the wave and just stays there, he can go a long, long time. But if he gets off the wave, he becomes mired in shallows... And in a long life, you can expect to profit heavily from at least a few of those opportunities if you develop the wisdom and will to seize them.
I want to find the next big thing before Wall Street. I want to know more about what I own than anyone else. And then I want to ride the wave. So that requires (1) a unique idea, (2) a lot of research, (3) making the correct investment conclusions and (4) executing on those conclusions [buying/selling/holding securities depending on risk/reward considerations].
For these reasons, I consider myself more of a business analyst than a stock analyst. A very small amount of my investment process involves analyzing traditional -- and usually unmeaningful -- value metrics such as sales, cash flow or earnings multiples. Rather, I focus on finding best-in-class assets and understanding why economic value should or will flow to particular companies and/or industries. To that end, I'm acutely focused on competitive disruption, new technologies and methods of doing business.
And most importantly, I'm focused on the people behind the business: I want talented operators with a demonstrated record of success, good decision-makers who are willing to manage for the long-term and the highest quality corporate governance.
As readers can see, successful investing requires one to be very selective. For that reason, I don't believe in diversification: I strive to only hold my top ideas at all times, typically 1-3 different companies maximum. That level of concentration is considered extremely risky in terms of conventional wisdom, but it is also the way to juice returns as an investor's skill level increases [of course, it works the other way if one is wrong]. So I typically follow my investments very, very closely and try to constantly blow up/challenge my original thesis to help avoid becoming stuck in a bad situation. At the end of the day, investing is probably more behavioral than anything else.