Dave Waters (Alluvial Capital): Illiquid Stocks, Process, and Investing in Tactile
Aug 30, 2024
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Dave Waters, a renowned investor known for his insights on illiquid stocks, shares his unique take on navigating the complexities of the expert market. He discusses the allure of small-cap companies that remain public against the odds and reflects on lessons learned from past investment mistakes. Waters emphasizes a structured yet adaptable approach to global investment opportunities, particularly in sectors like mining and commercial real estate. Tune in for a deep dive into value investing that will intrigue any investment enthusiast!
The podcast emphasizes the value of learning from past investment mistakes to improve decision-making in the ever-changing market landscape.
Dave discusses the potential of investing in sectors with crushed asset values, particularly in commercial real estate, to find hidden opportunities.
The exploration of unconventional markets and tangible assets illustrates the importance of a patient investment strategy focused on long-term value.
Deep dives
Value Investing and Community Building
Consistent high-risk adjusted returns are prioritized in the investment philosophy, emphasizing the joy of continuous learning while doing so. The approach cultivates a dedicated community of members who share a deep passion for investing, which contributes to high retention rates. The availability of unique research, theory, and educational resources enhances the overall experience. The supportive Slack community fosters connections among some of the smartest operators and retail investors, highlighting a collaborative ethos.
Investment Opportunities in Existing Markets
Current investment focus is on sectors experiencing significant downturns, particularly in commercial real estate, which has faced challenges since the COVID pandemic. The speaker suggests that areas where asset values are crushed can present fruitful opportunities for discerning investors. This strategy involves identifying industries where investors have fled, as these sectors often hide undervalued assets ripe for recovery. The narrative indicates a shift in investment strategies over the years, adapting to changing market conditions and value opportunities.
Navigating the OTC Market Challenges
The challenge of investing in the over-the-counter (OTC) market is highlighted through discussions about expert markets where companies have opted out of mandatory disclosures. Limited access for average investors makes it challenging to engage with potentially promising stocks. Actual investments may require unique approaches, such as working with specialty brokers or directly contacting companies to obtain essential financial information. This situation underscores the necessity of being resourceful and committed when pursuing less accessible investment opportunities.
Mistakes and Learning in Investment Processes
The importance of reflective learning from past investment mistakes is considered crucial to ongoing personal development as an investor. A significant example involved failing to promptly sell a stock that had started underperforming, spurred by initial success overshadowing current issues. This experience prompted a focus on evaluating present circumstances more objectively rather than clinging to past performance. The learning highlights the necessity to balance excitement for potential future growth with an accurate assessment of a company's current status.
Exploring Offshore Investments and New Fund Initiatives
The discussion emphasizes the exploration of unconventional markets and unique investment vehicles like a new fund focused on tangible assets with robust cash flows. This fund aims to include assets in obscure markets that present long-term value while allowing for limited liquidity, making it suitable for investors with a patient approach. The vision includes acquiring historical companies with tangible value, advocating for a diversified investment approach. The conversation highlights the excitement of identifying and acquiring various tangible assets with promising future returns.
Dave Waters returns to The Value Hive Podcast to discuss all things illiquid stocks, dark stocks, the expert market, and lessons learned from past mistakes.
Investing nerds will love this episode.
Dave is one of the sharpest, most unique investors I know. You'll enjoy this conversation.
Finally, a big thanks to our sponsors for making this episode happen.
Mitimco
This episode is brought to you by MIT Investment Management Company, also known as MITIMCo, the investment office of MIT. Each year, MITIMCo invests in a handful of new emerging managers who it believes can earn exceptional long-term returns in support of MIT's mission. To help the emerging manager community more broadly, they created emergingmanagers.org, a website for emerging manager stockpickers.
I highly recommend the site for those looking to start a stock-picking fund or just learning about how others have done it. You'll find essays and interviews by successful emerging managers, service providers used by MIT's own managers, essays MITIMCo has written for emerging managers, and more!
TIKR
TIKR is THE BEST resource for all stock market data, I use TIKR every day in my process, and I know you will too. Make sure to check them out at TIKR.com/hive.
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