- Small caps have beaten mid/large cap returns over time
- Successful small cap managers often move "up" into larger market cap companies and this perpetually keeps the small cap space relatively open
- Limited assets under management (AUM) is important
- It takes independent thinking to invest unconventionally well
- Published research is scarce and often biased
- Trading is costlier in the small cap space
- Limiting capital is often the only effective way to remain in the small cap space without overly diversifying from one's highest conviction ideas
- Do not rely on other's conclusions
- A successful status process can be competed away
- Stock price naturally follows value of underlying business given a long enough time horizon
- With management, understand their strategy and how they think about allocating capital
- Extremely important to learn from one's mistakes. They will happen and if learn from them they can be good as long as the process was correct
- Process, acting on conviction more important than results in the long-term. Never fall in love with a stock and look for and learn from mistake
- Investment edge should be able to be easily understood whether analytical, behavioral, technological or some combination
- Understand the risk and exposure of the fund. Being wrong in isolation is the ultimate ostracism
- Contrary opinions are the lifeblood of successful investing
What I got out of it
- Very interesting to get to see how an extremely successful investor thinks about the space he's in and the inherent advantages, disadvantages and difficulties of operating in this space.