Interview with Chris Pavese of Broyhill Asset Management
Apr 18, 2024
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Chris Pavese, Portfolio manager at Broyhill Asset Management, discusses Broyhill's investment philosophy, risk management, research process, and macro outlook. He shares insights on valuation, when to sell, and his current reading list. The podcast provides valuable information for investors interested in global value investing.
Broil Hill Asset Management focuses on tax-efficient, value-driven investing with a concentrated portfolio and benchmark-agnostic approach.
A meticulous and creative idea generation process at Broil Hill utilizes diverse valuation methods for uncovering mispriced assets across industries.
Managing risk involves staying informed on global economic trends, cautious investing during market exuberance, and seeking asymmetrical opportunities.
Deep dives
Public.com Features No Commissions or Per Contract Fees
Public.com stands out by not charging commissions or per contract fees for trading options, offering a rebate of up to 18 cents per option contract traded, leading to potential substantial savings for traders. This unique feature allows traders to maximize profits and minimize losses without the burden of added fees, making it an attractive platform for options trading.
Broil Hill Asset Management: A Blended Approach to Investing
Broil Hill Asset Management, headed by Chris Pivisi, follows a blend of arts and sciences in managing its opportunistic global value portfolio with a keen focus on capital preservation. The firm, originally a family office since 1980, transitioned to being an independent investment boutique in 2022, highlighting a strategic shift towards a value-driven investment approach. With a concentrated, tax-efficient strategy and benchmark-agnostic stance, Broil Hill emphasizes generating attractive long-term returns with lower risk compared to broader equity benchmarks.
Portfolio Construction and Risk Management Strategies
Broil Hill Asset Management focuses on a portfolio containing 10 to 20 names, emphasizing risk management through probability-weighted expected returns rather than chasing high-risk, high-reward opportunities. The firm places larger positions on businesses with perceived lower downside risk, aiming to protect capital over the long term. By prioritizing capital preservation and remaining cautious during market exuberance, Broil Hill aligns its investment strategy with a focus on consistent, moderate returns.
Idea Generation and Valuation: A Methodical yet Creative Process
The investment process at Broil Hill involves a meticulous but non-mechanical approach to idea generation, emphasizing the organic and creative nature of identifying mispriced assets. The firm employs a multi-faceted approach to valuation, considering various angles such as private market values, historical transaction data, and reverse discounted cash flow analysis. By evaluating stocks based on their unique qualities rather than fixed multiples, Broil Hill seeks to uncover value opportunities across different businesses and industries.
Understanding Market Sentiment and Risk Management
Being able to manage risk involves having a pulse on what's happening in the world economy without the need to predict the future. Recognizing warning signs like overvalued markets and global instability is crucial. While it's challenging to anticipate market movements, it's essential to identify when conditions are ripe for potential risks. Maintaining a cautious approach and seeking asymmetrical opportunities can lead to significant impacts on asset prices and overall portfolio performance.
Investment Strategies and Learning from Prominent Investors
Investors at Roy Hill focus on learning from various sources, staying open-minded, and engaging with a diverse range of perspectives. They emphasize the importance of understanding intrinsic value and adjusting positions based on changing circumstances. By studying renowned investors like Seth Klarman and Warren Buffett, they prioritize long-term value investing over market timing. Roy Hill's unique blend of arts and sciences in decision-making fosters a distinctive portfolio that aims for divergent results compared to conventional strategies.
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