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:

Warren Buffett's shareholder letters in 1980 and 1981
The Money Masters by John Train

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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