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Invest Like the Best

Exploring the ideas, methods, and stories of people that will help you better invest your time and money. Learn more and stay-up-to-date at InvestorFieldGuide.com
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Now displaying: August, 2019
Aug 27, 2019

My guest this week is Pat Dorsey, who was the longtime director of equity research at Morningstar, where he specialized in economic moats: sources of sustained competitive advantage that allow a few companies to deliver huge returns over time. Several years ago he left Morningstar to form his own asset management firm, Dorsey asset management, and build a portfolio of companies with wide moats like those he studied at Morningstar. And while moats are critical, equally important is how companies allocate the capital generated--or made possible--by the existence of the moat.  

A special thank you to Brian Bares who introduced me to Pat, and to Will Thorndike--an earlier guest on the show. In the vast majority of conversations you hear on this show, I'm meeting the guest for the first time. I mention this to encourage you to connect me with anyone whose story or way of looking at the world might resonate. Always feel free to contact me with ideas.  

Pat and I begin our discussion with the key differences between the sell side and the buy side, and then discuss all aspects of moats and capital allocation. 

 

For comprehensive show notes on this episode go to http://investorfieldguide.com/dorsey

For more episodes go to InvestorFieldGuide.com/podcast.

To get involved with Project Frontier, head to InvestorFieldGuide.com/frontier.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

 

Show Notes

2:23 – (First question) – Transition from the sell side to the buy side and the biggest surprise 

3:40 – What is a moat 

5:16 – What part of the stock market universe has a moat 

6:57 – Pat’s framework for identifying moat, starting with intangibles 

8:32 – The power of brands 

9:44 – what chance does an upstart have to come in and usurp a well-established brand   

12:24 – Switching costs as part of the framework for identifying a moat 

14:55 – The third component of identifying a moat, network effects, and what businesses should do to effectively build one 

17:29 – Last component, cost advantages/economies of scale 

19:29 – How do you analyze these four components into an investing framework that can be built into an actual strategy 

21:13 – How does Pat think about this from a mis-pricing standpoint 

23:37  – How does Pat incorporate current price of a company in consideration for future returns when pricing a moat 

25:39 – How should a company with a moat operate to protect that characteristic, especially when it comes to their capital allocation 

26:51 – Which characteristic of a moat does Pat find most intriguing 

30:35 – What makes for good and smart capital allocation 

35:58 – What is Pat’s process for identifying the best investment opportunities 

38:38 – What are good economics when looking at a company 

41:03 – If Pat could take any business, but have to swap leadership, what would he choose. 

44:13 – Back to his process of finding investment opportunities 

46:05 – Kindest thing anyone has ever done for Pat

 

Learn More

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag


Read more at https://investlikethebest.libsyn.com/pat-dorsey-buying-companies-with-economic-moats-invest-like-the-best-ep51#oBGdOp1br4EMtORd.99

Aug 20, 2019

My guest this week is Joe McLean, the founder of Intersect Capital, which provides financial advisory services to a variety of clients, including a number of NBA players and other professional athletes. 

What I loved about this conversation was the weaving of sport, coaching, and finance into a cohesive whole. There’s so much to take from this discussion—from the importance of service and low self-orientation to the impact of strict standards for who you work with, to common mistakes we all tend to make with money.

Please enjoy my conversation with Joe McLean.

 

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

 

Show Notes

1:18 - (First Question) – His backstory and the combination of athleticism and finance

2:43 – His time in Ireland

3:29 – Moving away from basketball and into finance

6:08 – What the Intersect business is today and his early lessons

7:55 – Most important coach/mentor

8:59 – Where the name Intersect came from

10:22 – Setting high standards early on

12:35 – Biggest mistakes he saw in his early clients

14:04 – Developing his value proposition to clients

14:24 – Michael Kitces Podcast Episode

16:57 – Process when he’s working with a client signing a new athletic contract

19:53 – The concept of a Pro’s Pro and Top 50 Reasons Professional Athletes Remain Wealthy

22:40 – Managing clients’ interest in creating businesses off their brand

24:20 – The role media plays in athletes’ long-term strategies

25:40 – Getting early clients into compliance with his strategy

28:24 – Daily maintenance role he plays with clients

32:24 – What has impressed him most from his young clients

33:36 – What makes for a great coach

34:50 – The meaning of “all in” to Joe

35:54 – His assessment of the financial services industry today

37:32 – Where his value in service came from

39:05 – Longer term vision for his business

40:33 – Unique ways he finds himself helping his clients

43:49 – Watching his client’s mentor the next generation

45:10 – Historical players and teams he personally admires

46:22 – Athletes and venture capital investing

47:38 – Who makes up his trust network

49:09 – What he’s most excited about for the future of the business

49:46 – Kindest thing anyone has done for Joe

50:24 – Biggest impact a coach had on his life

 

Learn More

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Aug 13, 2019

This week’s guest is, Zack Kanter, the founder and CEO of the Stedi.  Zack and I decided not to talk much about his business on this podcast and opted instead to explore more generally, so a bit of an introduction to what they do may be helpful here for some extra context. Stedi is a platform for exchanging and automating 300+ types of business-to-business transactions - transactions like purchase orders, invoices, etc. It’s a modern take on an archaic protocol called EDI - electronic data interchange, something I’d never even heard of until several months ago. Learning about EDI is a bit like finding out about the Matrix - every physical object you come across, from the food you ate for breakfast to the clothes you’re wearing and consumer electronics you use - anything with a barcode on it - was likely touched by EDI, often dozens of times before making it into your hands. Stedi is the first update to this messaging later in decades.

Our conversation in this podcast is about business in general, starting with Zack’s fascination with Walmart and Amazon. I should also not that my family is a recent investor in Stedi, and I’m thankful to have learned a great deal from him over the past few months. Please enjoy our conversation. 

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

 

Show Notes

1:52 - (First Question) – Interest in Walmart and Amazon

            4:02 – Sam Walton: Made In America

4:49 – What from their success can be applied elsewhere

11:07– The idea of tempo with a business

17:17 – Ability for a business to expand laterally

24:33 - Magic of Amazon as a constitution

26:24 – The concept of the OODA loop

            26:40 – Boyd: The Fighter Pilot Who Changed the Art of War

31:51 – Orientation within software businesses

            32:24 – The Systems Bible: The Beginner's Guide to Systems Large and Small

38:03 – Lessons in building software

            38:37– Certain to Win: The Strategy of John Boyd, Applied to Business

41:51 – Setting a common vision for a company

44:14 – Changing the dynamic of teams and how different size teams can accomplish different things

48:00 – How leaders should think about build vs buy

51:07 – The different types of value propositions

53:07 – Utility for companies

57:31 – Concept of network health and the best question from VCs

1:04:04 – Massive projects are less frequent in a world where we can do a lot quickly

            1:04:08 – Wait but Why

1:09:37 – Just in time vs just in case learning framework

1:11:55 – His favorite question

1:13:39 – Why is most commonly heard advice wrong

1:18:06 – Kindest thing anyone has done for Zack

 

Learn More

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Aug 6, 2019

My guest this week is Chris Bloomstran, the president and chief investment officer of Semper Augustus Investments Group. He became famous in investing circles a few years back for his incredibly detailed investigations of Berkshire Hathaway. While we do cover Berkshire towards the end of the conversation, we spend most of our time talking about what makes for a quality business. I loved some of his angles on the current landscape, including our discussion of companies like Richemont and Disney which are actively taking distribution back in house. Please enjoy our conversation.

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

 

Show Notes

1:18 - (First Question) – Largest investing error

4:52 – Defining quality investor and their investment strategy

11:48 – Incremental return on capital and other themes that they focus on with investments

15:33 – Importance of unique business models

22:58 – Ownership of the customer relationship

28:06 – Bringing distribution back in house

29:55 – Doing something unique with owned distribution

32:40 – His thoughts on growth and value

            32:42 – Chuck Akre podcast episode

37:12 – History of his interest in Berkshire Hathaway and he characterizes the business

53:29 – How is Berkshire protected into the future

59:17 – Most important trends in adjustments

1:08:00 – Which sectors or industries would he focus on

1:10:02 – Most intriguing business he’s unlikely to own

1:11:44 – Kindest thing anyone has done for him

 

Learn More

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

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