We have periodic devil's-advocate reviews of all our large holdings and a separate analyst is charged with presenting the negative case. It's more than a debate society the devil's advocate should genuinely believe the negative argument is the right one. We obviously make plenty of mistakes, but that discipline helps us reduce the frequency and [...]
One lesson borne of experience is that the best course in investing is often to do nothing. Given the propensity most of us have for tinkering, that's a hard lesson to apply in practice.
I started my career doing criminal defense work and learned a lot from having my clients lie to me and having to see through that. That's been invaluable in dealing with corporate America.
One red flag is when management sits down with us and right off asks, “What do you think is wrong with our share price?” Any implicit or explicit focus on the share price rather than the business is a bad sign. This may sound funny coming from an investor, but we also don't like to [...]
[The SEC’s] Regulation FD, for better or worse, is used by many bigger companies to restrict access to senior management and limit communication to the canned presentation. We learn a lot from sitting down with management at smaller companies and really talking about their businesses, competitors, and opportunities.