My guest today is John Harris, Managing Partner of Ruane, Cunniff & Goldfarb, where the flagship Sequoia Fund has an incredible 50-year track record running a highly concentrated portfolio of equities. In our conversation, we cover John’s approach to finding businesses that can be owned for the long-term, what goes into their diligence process, and the importance of resilience for investors. I think many of the stock pickers will enjoy many of the points on good management, good businesses, and using imagination. I hope you enjoy my conversation with John.
For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.
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[00:03:48] - [First question] - How markets undervalue long-duration growth of companies
[00:07:21] - Why should one even do DCFs at all
[00:10:01] - Defining homework when studying a business and what getting better as you do your homework tends to look like
[00:12:24] - How the market still underestimates how the quality of a company reduces risk
[00:15:09] - Reinvestment opportunity and risk and why they’re important for long term returns
[00:17:14] - Lessons learned owning Google stock options for over a decade
[00:22:02] - Skill versus luck when it comes to investing psychology
[00:24:32] - Perspectives on big market cap companies in a portfolio when success often comes from smaller-cap non-linear growth
[00:26:47] - Features of the current market landscape that he finds interesting
[00:31:24] - What buying behavior looks like in the demand side of the business equation
[00:34:10] - Discovering a company that served the customer and was a delight to discover
[00:37:58] - Analysing getting one's hands dirty to get a competitive advantage in serving the customer
[00:39:24] - The hardest episode of his investing career and what he learned from it
[00:43:03] - Reasons why a company succeeded after doing a deep dive but not buying in
[00:43:54] - One of the CEOs he finds most remarkable
[00:47:20] - Examples of businesses where scale isn’t the driver of competitive advantage
[00:49:50] - A company they owned that did well but didn’t have the strongest company culture
[00:50:56] - His view on the investment industry today writ large
[00:52:16] - Ways investors could expand their imagination when analyzing businesses
[00:53:07] - The kindest thing anyone has ever done for him