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TIP582: Quality & Defensive Investing w/ Christian Billinger

Oct 13, 2023

55:19

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Christian Billinger, chairman of Billinger Förvaltnings AB, discusses quality investing, assessing a company's reinvestment rate, and finding operating managers with soul in the game. He prefers investing in family-owned public equities and prioritizes risk management. He shares insights on working with institutional investors and highlights Markel as an exceptional business. Christian's fund is heavily invested in the spirits industry, with a focus on tequila and cognac, despite recent underperformance in 2023.

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Quick takeaways

Quality investing focuses on generating performance from underlying business performance rather than buying and selling securities.

Family-owned public equities often have soul in the game, exhibiting a sense of purpose and taking a long-term view.

Downside protection is a crucial aspect of investing, involving risk management, avoiding excessive leverage, and investing in businesses with resilient models and solid balance sheets.

Deep dives

Quality investing and risk management

Quality investing, according to Christian Billinger, involves generating most of the performance from the underlying performance of invested businesses rather than buying and selling securities. It emphasizes risk management and focuses on businesses that offer fair or better valuations while anticipating most returns to come from operating performance.

Introduction

2min

Quality Investing and the Importance of Reinvestment

11min

Signs of a Quality Company and Family-Controlled Businesses

8min

Compensation Structure, 'Soul in the Game,' and Downside Protection

15min

Implications of Funds Operating as Marketing Firms

3min

Discover the Nutrient-Rich Plant-Based Super Blend: Kachava

2min

The Exceptional Business of Markel

17min

Growth and Demand in the Spirits Industry

2min

Clay Finck is joined by Christian Billinger to discuss his quality investing philosophy.

Christian is chairman of Billinger Förvaltnings AB, which invests in publicly listed equities. The firm seeks to generate attractive long-term total returns in real terms without employing financial leverage. Christian previously covered European equities for Cheyne Capital, Gartmore, and GAM in London.

IN THIS EPISODE YOU’LL LEARN:

00:00 - Intro

01:39 - What quality investing is and why it works.

04:20 - How Christian assesses the reinvestment rate for a business and a company’s runway.

10:27 - Why soul in the game is more important than skin in the game.

12:58 - Qualities to look for to find operating managers with soul in the game.

19:16 - Why Christian prefers investing in family-owned public equities.

21:59 - Why he highly prioritizes removing the risk of losing money.

25:48 - What differentiates Christian’s current holdings from companies on his watchlist.

31:44 - What Christian learned from working with institutional investors.

41:36 - What stands out to Christian about Markel.

46:37 - Why Tom Gayner is an investor and business manager worth studying.

47:46 - How the investment outlook between Berkshire and Markel differ.

49:42 - Why Christian’s fund is heavily invested in the spirits industry, and what has led to the recent underperformance in 2023.

Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.

BOOKS AND RESOURCES

Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, and the other community members.
Christian’s investment firm.
Related Episode: WSB566: The Passionate Pursuit of Lifelong Learning w/ Gautam Baid or watch the video here.

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We Study Billionaires - The Investor’s Podcast Network

TIP582: Quality & Defensive Investing w/ Christian Billinger