Minority Growth Investing with Josh Collinsworth, Portfolio Manager at Nomadic Value Partners
Jan 4, 2024
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Josh Collinsworth, Portfolio Manager at Nomadic Value Partners, discusses his path from allocator to starting his own investment firm. He shares his expertise within healthcare and Nomadic's time horizon. They also explore portfolio concentration, position sizing, lowering the cost of utility-grade solar, the value of a primary care platform, and through hiking in the Uinta Range.
Oak Street's innovative model has successfully addressed incentive problems in healthcare, leading to better outcomes and cost savings.
Nomadic Value Partners recognizes Oak Street's unique position and investment potential in minority growth investing.
Josh Collinsworth adopts an incremental approach to portfolio position sizing, reducing risk and optimizing execution.
Deep dives
Oak Street's innovative approach to healthcare delivery
Oak Street is a healthcare company that has revolutionized the way healthcare is delivered by focusing on outcomes, patient satisfaction, and cost savings. Through their innovative model, they have successfully addressed the incentive problems in the healthcare system and generated better outcomes for patients. Their approach of pushing financial risk closer to providers has led to lower costs and improved patient care. Oak Street's emphasis on organic growth and building a quality culture has set them apart from competitors. Despite facing challenges such as rapid growth and fluctuations in interest rates, Oak Street has consistently maintained their outcomes and continued to deliver quality healthcare.
Nomadic Value Partners' investment thesis on Oak Street
Nomadic Value Partners, an investment firm, recognizes Oak Street's unique position and investment potential. They view Oak Street as a leader in the healthcare industry, with a focus on minority growth investing. By understanding the total addressable market, business model innovation, and having strong sponsorship, Oak Street has proven itself as an attractive investment. Despite fluctuations in the market, Nomadic Value Partners has remained confident in their investment in Oak Street, continuously analyzing the company's metrics and generating insights to make well-informed decisions. Their concentrated portfolio approach allows them to capitalize on the information and perspective they have gained, while maintaining a balanced risk profile.
The future potential and growth of Oak Street
Oak Street's innovative approach to healthcare delivery has garnered attention from investors and industry experts. The company's commitment to quality care, better outcomes, and cost savings has positioned them as a key player in the healthcare market. Oak Street's ability to generate operating leverage and capitalize on market opportunities has contributed to their growth. With strong relationships with payers, providers, and patients, Oak Street is well-positioned for future success. Their partnership with CVS further solidifies their position and offers significant synergies. As Oak Street continues to increase patient engagement and expand their presence, the potential for significant operating margin enhancements is evident, making them an attractive investment for the future.
Investment Approach: Size Positions Incrementally
Josh adopts an incremental approach when sizing positions in his portfolio. He no longer buys a 12% position upfront but builds it up gradually by starting with a 3% allocation and adding to it based on the thesis confirmation and trading experience earned over a period of months. This method helps to reduce risk and optimize execution.
Time Horizons and Returns: The Nomadic Sweet Spot
In terms of time horizons, Josh positions Nomadic Value Partners between long-short hedge funds (3 months to a year) and private equity funds (18 months to 5 years). He aims to time cycles right to drive re-rates and focuses on returns on incremental invested capital and company culture. By straddling the line between short-term sentiment-driven investments and long-term family dynastic capital, Josh aims for sustained outperformance periods with his investments.
My guest on the show today is Josh Collinsworth, the Portfolio Manager at Nomadic Value Partners. Josh started Nomadic in 2019 after spending a number of years as an allocator. Josh is one of the most eclectic investors I know, and his understanding of the byzantine US healthcare system makes him my go-to investor when trying to navigate investments in that industry. In this enlightening conversation, we discussed:
Josh’s path from being an allocator to starting his own investment firm;
How he developed an expertise within healthcare;
Nomadic’s time horizon and how it compares to that of other investors;
All opinions expressed by your hosts and the podcast guests are solely their own opinions and do not reflect the opinion of SNN or its affiliates. This podcast is for informational purposes only, it is not investment advice, and should not be relied upon for any investment decisions. We are not recommending the purchase or sale of any securities. The hosts and guests may be beneficial owners of the securities discussed. You should not assume that the securities discussed are or will be profitable.
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