Discover how 2 billion dollar fund managers make investing decisions.
Meet David Poppe (right) and John Harris (not in photo).
Their firm, Ruane Cunniff & Goldfarb, manages the flagship Sequoia Fund.
They shared 5 of their key investing principles.
Here's the breakdown:
Meet David Poppe (right) and John Harris (not in photo).
Their firm, Ruane Cunniff & Goldfarb, manages the flagship Sequoia Fund.
They shared 5 of their key investing principles.
Here's the breakdown:
1. It's all about people
They believe there's a difference between good and excellent managers.
Their goal is to find the latter.
Because great management teams make better capital allocation decisions.
So in the long run, it makes the investment more predictable.
They believe there's a difference between good and excellent managers.
Their goal is to find the latter.
Because great management teams make better capital allocation decisions.
So in the long run, it makes the investment more predictable.
1b. How do they assess their managers?
They like to ask this question they learnt from Buffett:
"If you had to leave $1 million with somebody for 5 years, would you trust them to be a fiduciary of your investment?"
If the answer is yes, it helps them sleep better at night.
They like to ask this question they learnt from Buffett:
"If you had to leave $1 million with somebody for 5 years, would you trust them to be a fiduciary of your investment?"
If the answer is yes, it helps them sleep better at night.
2. 95% of effort goes into qualitative work
Because the numbers can easily be counted by anyone.
There is no real edge there.
It's the quality factors that determine the longevity of the business.
And that's where most of the future value of their investment will come from.
Because the numbers can easily be counted by anyone.
There is no real edge there.
It's the quality factors that determine the longevity of the business.
And that's where most of the future value of their investment will come from.
3. Focus on early stage of growth
This works because of psychological errors.
Most investors place more emphasis on something near and tangible.
So for such early stage businesses, the future value becomes hard to estimate.
This creates mispricing and buying opportunities.
This works because of psychological errors.
Most investors place more emphasis on something near and tangible.
So for such early stage businesses, the future value becomes hard to estimate.
This creates mispricing and buying opportunities.
4. Do your own work and research
Investing is more emotional than intellectual.
So they do their own research NOT because it gives them an informational edge.
But because it gives them conviction.
When the market corrects, it helps them stay rational.
Investing is more emotional than intellectual.
So they do their own research NOT because it gives them an informational edge.
But because it gives them conviction.
When the market corrects, it helps them stay rational.
5. Don't rely on bold predictions
For their investments to work, they don't need the company to grow at aggressive rates. Why?
Because of their price discipline.
They paid a price that does NOT require them to make bold predictions about the future.
Just modest ones will do.
For their investments to work, they don't need the company to grow at aggressive rates. Why?
Because of their price discipline.
They paid a price that does NOT require them to make bold predictions about the future.
Just modest ones will do.
That's it.
David Poppe has since stepped down as CEO of Ruane, Cunniff & Goldfarb in 2018.
John Harris is still a PM there, and continues to manage the Sequoia fund.
You can read the full interview they did with Graham and Doddsville here:
medium.com/graham-and-dod…
David Poppe has since stepped down as CEO of Ruane, Cunniff & Goldfarb in 2018.
John Harris is still a PM there, and continues to manage the Sequoia fund.
You can read the full interview they did with Graham and Doddsville here:
medium.com/graham-and-dod…
Recap of 5 key investing principles:
1. It's all about the people
2. 95% of effort goes into qualitative
3. Focus on early stage growth
4. Do your own research
5. Don't rely on bold predictions
1. It's all about the people
2. 95% of effort goes into qualitative
3. Focus on early stage growth
4. Do your own research
5. Don't rely on bold predictions
If you found this helpful, then follow me at @heymaxkoh
I share about how I attained financial freedom before age 30...
By investing in great businesses.
Also, check out this powerful framework from Yen Liow on how to find multi baggers:
I share about how I attained financial freedom before age 30...
By investing in great businesses.
Also, check out this powerful framework from Yen Liow on how to find multi baggers:
https://twitter.com/heymaxkoh/status/1448299477303894018?s=20
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