Ben Gilbert: evaluation

Transcript context

…Yeah. They all know about Buffett, they know about that, and then they look at me like I'm some idiot. They're like, what are you talking about? Why would I give up the fees? Right. If I have a $5 billion fund and I have a guaranteed 2% fee every year, it takes a certain amount of ideological conviction. Not even faith in your own abilities because I think a lot of people say, I know I'm going to outperform the market, and many do. You truly have to be ideological about it in order to turn down the easy standard default path to those fees. Yeah. Going back to your original question, Ben. The first two, make money and have a moat. Number three, now this is where it starts to get into very idiosyncratic portfolio construction because, in the first two, you want in every special top 1% kind of a business. But the third one is more narrowing your circle of competence and more narrowing what you choose to do with your life as an investor to something that personally fits you. The third is really about the relationship. The relationship is all about people. Again, we like to go big on companies where we feel like we have a great relationship. If we don't have a relationship with the company in a very deep way, then we're like any other investor. We're like an outsider looking in. I did say that some of these public investors are very impressive and that they are not like outsiders that I've ever known. They really go deep into those companies, but again, we like to have a special relationship. If we don't, then we get very nervous holding onto a massive concentrated position in a company where we're just like any other investor and an outsider looking in. We have no proprietary knowledge. At some point, of course, we had some proprietary knowledge in helping build some of these companies, but that knowledge decays over time and then we become like any other investor. So maybe we should just start to distribute our shares, sell our shares, or whatever. We should get out at some point. We all part ways as friends. If the founder or the company found their new best friends because now it's Fidelity, T. Rowe Price, or somebody else, we're no longer getting the updates and it's tricky. We're kind of new into this whole public investing realm. The relationship is very important to me personally, and it does give us some advantages of insight. After a while, it just becomes a personal decision. I think of some of these businesses as really like a family business. If you have a family business and it takes care of your family and generations potentially—some of these family businesses go on for literally generations—if your family business happens to do well, you and generations of your family will do quite well. If it fails, then your family fails, so you better make it work. There's nothing wrong with riding on the coattails of a great family business. There's nothing to say that you deserve something you don't deserve. If the business doesn't do well, you don't deserve to do well. I start to have an irrational attachment to certain businesses where I’ll say, you know something? It’s special to me, I'm not going to part with it like what Buffett says. No matter what, he's irrational. He just won't sell any business. He might write certain businesses down to zero like with the Berkshire textile mills and so on. I'm okay doing that, so I'm perfectly happy holding onto these shares. Here's another thing.…

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