Talking Billions with Bogumil Baranowski

The Compounders Hiding in Plain Sight | Joseph Shaposhnik on Finding Decade-Long Winners [Excess Returns Podcast]

14 snips
Sep 27, 2025
Joseph Shaposhnik, founder of Rainwater Equity and former TCW portfolio manager, shares insights on investment strategies focused on recurring revenue and quality businesses. He emphasizes the importance of management quality, distinguishing between passionate leaders and opportunists. Joseph discusses lessons from legendary investors like Buffett and Miller, advocating for significant position sizing and a disciplined approach to selling. He also highlights the value of free cash flow and the need for investors to prioritize high-quality businesses over simply cheap ones.
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INSIGHT

Predictability Trumps Ubiquitous Opinions

  • Focus only on predictable, recurring-revenue businesses to improve forecasting and capital allocation.
  • Prioritize free cash flow compounding and management quality over having opinions on every index constituent.
ADVICE

Let Free Cash Flow Guide Size

  • Let cash flow guide position sizing and allow winners to run as cash flows translate to equity value.
  • Use free cash flow growth as the primary driver that moves stock prices.
INSIGHT

Buffett Paid For Quality More Than People Realize

  • Buffett's biggest wins were in recurring-revenue, high-quality businesses where he paid up for quality and leadership.
  • His mistakes often came from cyclical, hard-to-predict industries.
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