Value Investing: The Starvine Way

In this episode, we keep unpacking Pulak Prasad’s What I Learned About Investing from Darwin and move from pure defense to intelligent offense. We recap the non-negotiables from Part 1 (what not to buy), then show how to narrow thousands of stocks to a tight focus list using one “Moneyball” metric: ROCE (Return on Capital Employed). We compare Costco vs. Tiffany to show why operating margin can mislead while ROCE reveals the real engine. From there, we layer on robustness—the business equivalent of a roll cage—using traits like excess cash, fragmented customers/suppliers, high entry barriers, stable management, and slow-changing industries. Real-world case studies (Havells, Page Industries, Mindtree) illustrate how high-ROCE, robust companies survive hits, compound cash, and seize opportunity when others can’t. We also tackle convergence (why certain business models win across time/geographies and others chronically destroy capital) and “Darwin Ate My DCF” (ditch false precision, value what’s proven). Finally, we break the Pavlovian habit of reacting to macro headlines and hot themes, and double down on the only variable we truly control: entry price. Key Takeaways Slash the universe first: avoid crooks, turnarounds, heavy debt, serial acquirers, fast-changing industries, and misaligned owners. Use ROCE as the first filter; it proxies for great ops, smart capital allocation, and real moats. Favor robust businesses that can take a punch—and convergent models that win repeatedly. Price is the lever. Patience is the edge. Forecast less; observe more. Next up (Part 3): “Don’t be Lazy—Be Very Lazy.” Why inactivity, focus lists, and fat-pitch timing turn good process into great compounding.

In this first installment of our three-part series on What I Learned About Investing From Darwin, we explore one of the most original and thought-provoking contributions to the world of fundamental investing in recent years. Written by Pulak Prasad—an investor with an exceptional long-term track record—this work blends evolutionary biology with practical investment wisdom in a way few others have attempted. In Part 1, we focus on Prasad’s central principle: avoiding big risks. While most investors are drawn to potential upside, Prasad emphasizes the importance of minimizing the chance of permanent capital loss—a mindset that aligns with his genuine "forever" holding period. Drawing on lessons from Darwin and the natural world, he highlights how survival—both in nature and in investing—is often about what you don’t do. Tune in to discover why the skill of not losing may be the most underrated edge in investing, and how evolutionary thinking can sharpen your decision-making in the market.

What are the implications of AI for professional investors? This is surely a question on every fund manager's mind.  In this episode, we are joined by Andi Kerenxhi, founder of Ubineer. Andi is at the forefront of merging AI into professional investing with his firm’s proprietary software. Adding to his relevance for this podcast is his affinity for long term value investing. In this conversation, which was recorded on December 17, 2024, we explore how AI is benefiting professional investors, and how AI is likely to shape the landscape of both active and passive investing.  Watch Andi's keynote presentation at the Ben Graham Centre for Value Investing's 2024 Value Investing Conference here. 

In 2023, a collection of 38 letters from J.D. Rockefeller to his son was published. These letters spanned over four decades and were not previously widely available. Contained in the 194 pages is a treasure trove of wisdom relating to a broad range of topics. However, for this episode, the focus was on Rockefeller's advice that is helpful from an investing perspective. Be sure to obtain a copy of the book to gain access to the inner workings of his mind. A word of appreciation is owed to Open Stax Textbooks for making these invaluable writings available to the public. 

Our guest in this episode was Kim Shannon, a decorated value manager in Canada. Kim has over four decades of industry experience, which covered some of the biggest tumults in market history. Being able to hear Kim's lessons from those major corrections and how she navigated them from a value manager’s perspective is invaluable, to say the least. We also discussed topics such as the importance having mentors, what it takes to be successful in investment management, and the paucity of women in the industry.  This interview was recorded on August 26, 2024.

Christopher Mayer, a seasoned portfolio manager and co-author of '100 Baggers,' dives into the challenging world of market downdrafts. He discusses the significance of understanding drawdowns, particularly in high-performing stocks like Apple and Netflix, emphasizing long-term strategies. Mayer stresses the virtues of patience and resilience in value investing, noting how historical examples from giants like Microsoft provide valuable lessons. He also highlights the power of visualization in navigating stock performance, encouraging investors to maintain discipline amid downturns.

What do you believe CEOs' primary responsibilities are and what are the key ways that they add enduring value to a corporation?  In this episode, Dr. George Athanassakos shares his expertise in an area that has historically been overlooked by financial academia: the ability of CEOs to allocate capital and the implications on investment returns. Great CEOs tend to be great value seekers.  Listen to this insightful interview to benefit from the compelling investment lessons shared by Dr. Athanassakos.   Interview recorded on July 11, 2024    

In the finale of Season 2, we spoke with Robert Bruner, the co-author of “The Panic of 1907: Lessons Learned from the Market’s Perfect Storm”. It is important as investors to study business history and the lessons it has to offer. Mr. Bruner identifies the causes of past financial crises and offers insights into how the everyday investor can prepare for difficult times. The second edition of The Panic of 1907, which will be released on March 8, 2023, can be purchased from the Wiley website. Mr. Bruner's blog is also very much worth perusing.   Listen to the full episode on: Apple Podcasts: https://podcasts.apple.com/us/podcast/value-investing-the-starvine-way/id1528075267… Spotify: https://open.spotify.com/show/1D96SAh5n7lQhWpLP6X6ef… YouTube: https://youtube.com/@starvinecapital382/videos…

Moneyball is a parallel universe with value investing. What lessons can we learn from the book and movie? Listen to find out. The 2015 memo, "Moneyball: How is Baseball Related to Value Investing?" can be accessed with this link:  https://starvinecapital.com/wp-content/uploads/2017/07/Memo-Moneyball-and-Investing.pdf  

It seems straightforward enough to know when to buy a stock, but knowing when to sell almost always poses a tougher challenge. Should we sell every time a holding's price significantly increases? When is it a mistake to sell? And when does it make sense to sell at a loss? Listen to the latest episode to sharpen your acuity on this subject.