Investor John Huber shares his investing principles, including capital allocation, revenue growth, and his focus on North American stocks. He discusses why he likes Alphabet and why Floor & Décor is a major position. The chat covers strategic investing inspired by Warren Buffett, company culture's role in Google's success, quick conviction investments, and insights on stock research. It also explores the potential impact of automated vehicles on the stock market and the importance of maintaining a diversified portfolio. Plus, a look at the similarities between running and investing, along with book recommendations.
Emphasis on 6-10% revenue growth rate as sweet spot for investments.
Importance of culture and talent in assessing long-term impacts of investments.
Similarities between fitness and investing in requiring consistency and strategic decision-making.
Deep dives
Understanding Position Sizing for Fundamental Investors
Fundamental investors often focus intensely on research, but their discipline in position sizing can sometimes be lacking. While their best idea is usually their largest position, determining the sizing of other ideas can be challenging. Alpha Theory, a tool used by many successful fundamental managers, helps investors systematically size their positions based on research efforts. By connecting extensive research with portfolio stock selection, this tool has enhanced position sizing processes for over 300 managers, potentially benefiting anyone looking to improve their approach.
Insights from John Huber on Investment Precision and Long-Term Thinking
In a discussion with John Huber of Saber Capital Management, the emphasis was on his '3 engines for growth' model and his preference for a 6-10% revenue growth rate as a sweet spot for investments. Huber's approach involves long-term assessment of stocks over a 10-year timeframe and delves into how his views on companies like Alphabet have evolved over years. By exploring investment precision, long-term thinking, and insights into US small-cap value, Huber offers valuable perspectives on successful investment strategies.
Comprehending the Importance of Culture, Employee Talent, and Workplace Satisfaction in Long-Term Investment Decisions
With a focus on the significance of culture, employee talent, and workplace satisfaction in long-term investment impacts, the challenge lies in assessing companies like Google through a quality lens. The discussion covers potential disruptions in industries like AI and automated vehicles, highlighting the complexities of predicting outcomes over 10 years. Through an exploration of durability, capital allocation, and the narrative versus reality in investment choices, the difficulty of envisioning the future amidst fast-changing markets is articulated.
Jane Doe by Jim Thompson
Jane Doe is a thrilling mystery novel by Jim Thompson that follows the story of a private detective investigating a complex case involving deceit, betrayal, and suspense. As the protagonist delves deeper into the investigation, twisted secrets are unraveled, leading to a shocking revelation that challenges everything the characters thought they knew. With its gripping narrative and unpredictable twists, Jane Doe captivates readers with its suspenseful storytelling and intricate character development.
Investing in China and Japan
Visiting China with investors provided insights into China's political and economic landscape. China's shift towards centralizing power impacted its trajectory, moving away from market liberalization. The competitive dynamics and rapid growth in China pose challenges for investors. Japan offers contrasting opportunities with focused company valuations, encouraging buybacks, and potential economic growth.
Long Feedback Loops in Fitness and Investing
Similarities between fitness and investing lie in long feedback loops, requiring consistency and time for results. Making healthy choices and exercising parallels the patience and diligence required for successful investing. The gradual process of improvement in both fitness and investment outcomes underscores the importance of sustained effort and strategic decision-making.
John Huber is an investor with a small fund managing his family assets and outside capital in a concentrated portfolio.
John has written an excellent blog, Base Hit Investing, for many years, explaining his investing principles.
We discuss these in this episode, including what John looks for in an investment, why he emphasises capital allocation even more today, where he sees the sweet spot in revenue growth, why he likes Alphabet, why he is focused in North American stocks but is now looking at Japan and US small caps and why Floor & Décor is one of his major positions.
