Chris Cerrone is a Partner at Akre Capital Management. Prior to joining Akre Capital Management in 2012, Chris served as an equity research analyst for Goldman Sachs & Co. in New York from 2010 to 2012. In that position, he covered restaurant and retail companies. He began his investment management career in 2007 as a junior equity research analyst with Century Capital Management in Boston. Chris graduated summa cum laude with a B.A. in economics from Tufts University.
In this episode, I welcome Chris back on the podcast and talk about the meaning and the importance of quality in your investments. He shares with us the 3-legged stool analogy that perfectly symbolizes the “Nirvana” of business, the importance of finding happiness in small improvements, and how being disciplined and discerning can help businesses handle inflation better. All this and more in this episode so make sure to stay tuned until the end!
Let’s Talk About Quality
- The importance of defining quality in the business
- Defining the “Nirvana” in business
- It's a superior business
- It’s exceptionally well-managed
- Managers can reinvest the naturally occurring excess capital, as well as they run the business enterprise
- The 3-legged stool - symbol for the Nirvana
- Simple, boring, and “un-sexy” approach
- The power of compounding
- The results are not boring
- Happiness Come from Small Improvements
Sifting Through the Wheat and the Chaff
- Ensuring quality
- Having discipline
- Importance of being discerning
- 1st leg of the 3-legged stool analogy: Superior Businesses
- Does the business have competitive advantage?
- Does it have superior growth?
- Is there an element of anti fragility?
How Inflation Impacts Businesses
- Looking at history and using this to help build frameworks
- Inflation has always been part of the equation
- Importance of businesses to have pricing power
- Low levels of capital intensity
Resources Mentioned:
Key Quotes:
“The setting suits the strategy and with all the activity and frenetic innovation going on in some of the finance capitals, we're really happy to be where we are here.” - Chris Cerrone
“It really is important to stay disciplined. be discerning, remember that you only have to do a few things well over an entire investing career to really get where you want to go. So you don't have to participate in the vast majority of what's going on out there.” - Chris Cerrone
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Connect with Chris:
LinkedIn: https://www.linkedin.com/in/chris-c-40aba9140/
Website: www.akrecapital.com
Listen to Chris’s previous Colloquium episode!
Connect with me:
LinkedIn
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