Ben Gordon, founder and head portfolio manager at Blue Grotto Capital, shares his journey from analyst to managing his own hedge fund. He discusses his unique research methodologies, emphasizing historical regressions and the resilience of specific business models. Gordon reveals insights on successful investments in Spectrum Brands and Cedar Fair, while also highlighting the challenges of shorting stocks—a 'dark art.' He reflects on lessons learned from past investment missteps, particularly in the fashion industry, underscoring the need for adaptability in fluctuating markets.
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question_answer ANECDOTE
Blue Grotto Name Origin
Ben Gordon chose Blue Grotto Capital's name after the Blue Grotto in Capri, Italy.
He visited the grotto during a backpacking trip after college and liked the double entendre with his initials.
insights INSIGHT
Career Progression
Ben Gordon's career began in equity research, transitioned to the buy-side at GMT Capital, and culminated in founding Blue Grotto Capital.
His progression demonstrates a clear path from analyst to portfolio manager, emphasizing continuous learning and a drive for independence.
question_answer ANECDOTE
Emerging Markets Wireless Carriers
Ben Gordon invested successfully in emerging market wireless carriers by recognizing the adoption curve and decreasing handset costs.
This creative investment, made while he was an analyst, propelled his career progression at GMT Capital.
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This week I had the privilege to talk with Ben Gordon. He is the founder and head portfolio manager at Blue Grotto Capital. This episode is a deep dive into Ben’s process of researching and finding ideas, why he started Blue Grotto, his prior work at GMT, why he went long on Spectrum Brands and Cedar Fair Entertainment, and why shorting is a dark art.
Here is the time-stamp:
[0:00] The Story Behind Blue Grotto
[3:00] Who is Ben Gordon?
[6:40] From Analyst to PM: Emerging Markets Wireless Carriers
[10:00] Reply and Smurfit Kappa
[12:05] Using Regressions to Find Ideas
[16:30] The IT Business
[18:20] Lessons from Bad Investment Ideas: Michael Kors
[22:10] Importance of Walking Away from an Investment Theme
[30:00] The Catalyst to start Blue Grotto
[36:05] Spectrum Brands
[46:00] Cedar Fair Entertainment: The Theme Park Business a Regional Monopoly
[49:10] Shorting: The Dark Art
[55:30] Shorting Orthopediatrics $KIDS
[1:00:00] Position Sizing while Shorting
[1:04:00] VMware: Optionality and Themes Case Study
[1:12:40] Ben Gordon’s Investing Mosaic
[1:22:00] Improving Weaknesses
[1:27:10] More from Ben and Closing Questions
If you liked what you heard, check out Ben's website here.
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