Invest Like the Best with Patrick O'Shaughnessy

Tracy Graham - Investing in Overlooked Businesses – [Invest Like the Best, EP.206]

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Dec 29, 2020

Tracy Graham, founder of Graham Allen Partners, specializes in investing in technology-driven businesses in overlooked U.S. markets. In this engaging conversation, he shares how his football days at Notre Dame shaped his investment philosophy. Tracy discusses the untapped potential of secondary markets and how technology revamps traditional businesses. He also touches on the importance of data in manufacturing, ethical investment practices, and the profound impact of mentorship and kindness on personal growth.

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ANECDOTE

Early Life and Education

Tracy Graham grew up in Englewood, Chicago, and attended a predominantly African American elementary school.
Attending St. Rita High School on a scholarship changed his life, exposing him to a wider world and leading him to football and Notre Dame.

ANECDOTE

Lou Holtz's Influence

Lou Holtz, Notre Dame football coach, visited Graham's home, assuring his mother a Notre Dame degree would be a worthwhile investment.
Holtz emphasized values like doing right, doing your best, and treating others well, which influenced Graham's business philosophy.

ANECDOTE

First Entrepreneurial Venture

Graham's first entrepreneurial venture was Cybercom Business Directories, initially aiming to put phone books online.
Jerome Bettis, a close friend from Notre Dame, provided the initial investment, and the company pivoted to providing internet access.

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My guest today is Tracy Graham, founder and managing principal of Graham Allen Partners, a private equity firm that specializes in acquiring and building technology-enabled businesses. In our conversation we discuss how Tracy ended up playing football at Notre Dame, the key lessons he learned from famed coach Lou Holtz, why Graham Allen believes that businesses in secondary or tertiary US markets are undervalued, and why technology represents a great way to improve old businesses. I hope you enjoy my fun conversation with Tracy.

For the full show notes, transcript, and links to mentioned content check out https://www.joincolossus.com/episodes/86798473/graham-investing-in-overlooked-businesses.

This episode of Invest like the Best is brought to you by Tegus. Tegus has built the most extensive primary information platform available for investors. With Tegus, you can learn everything you’d want to know about a company in an on-demand digital platform. Investors share their expert calls, allowing others to instantly access more than 10,000 calls on Square, Snowflake, or almost any company of interest. All you have to do is log in. Visit https://www.tegus.co/patrick to learn more.

This episode is brought to you by the MIT Investment Management Company (MITIMCO). MITIMCO is always on the looking for promising investment managers with the potential to compound our capital for a decade or more. If you think your firm is too small, too young, or too non-institutional, you might just be exactly what we are looking for. Check us out at https://mitimco.org/partner/ or e-mail us at partner@mitimco.org. Please also see our new page for emerging managers https://mitimco.org/emerging-managers/.

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Show Notes

[3:35] – [First question] – Tracy’s origin story

[7:17] – Lessons from Lou Holtz

[8:58] – Why Lou was so good as a leader

[10:32] – His early experience as an entrepreneur

[15:45] – Investing principle at Graham Allen and how it was shaped by his experience

[18:41] – Types of companies they target for investment

[23:09] – Defining a unique and interesting data set

[27:14] – Mispricing data sets and the fools gold

[29:19] – Overview of a Midwest manufacturing company

[31:50] – How data is being generated in manufacturing businesses

[36:57] – Data to improve marketing

[41:13] – Using data to dissect distribution

[45:59] – Valuation of the companies in terms of multiples they are looking at

[47:31] – Business values he strongly believes in

[50:54] – Significance of Kenneth Allen in the firm

[52:23] – Kindest thing anyone has done for him