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Invest Like the Best with Patrick O'Shaughnessy

Chuck Akre - The Three Legged Stool - [Invest Like the Best, REPLAY]

Invest Like the Best with Patrick O'Shaughnessy

Colossus

Technology, Business, Investing

4.72.5K Ratings

🗓️ 6 February 2024

⏱️ 49 minutes

🧾️ Download transcript

Summary

Today, we're running a replay of my 2019 conversation with legendary investor Chuck Akre. Chuck founded Akre Capital Management in 1989, which now manages approximately $14B dollars. We discuss his investing style and his “three-legged stool” for evaluating companies. Please enjoy this great conversation. Listen to Founders Podcast For the full show notes, transcript, and links to mentioned content, check out the episode page here. ----- This episode is brought to you by Tegus. Tegus is the modern research platform for leading investors, and provider of Canalyst. Tired of calculating fully diluted shares outstanding? Access every publicly-reported data point and industry-specific KPI through their database of over 4,000 drivable global models hand-built by a team of sector-focused analysts, 35+ industry comp sheets, and Excel add-ins that let you use their industry-leading data in your own spreadsheets. Tegus’ models automatically update each quarter, including hard-to-calculate KPIs like stock-based compensation and organic growth rates, empowering investors to bypass the friction of sourcing, building, and updating models. Make efficiency your competitive advantage and take back your time today. As a listener, you can trial Canalyst by Tegus for free by visiting tegus.co/patrick. ----- Invest Like the Best is a property of Colossus, LLC. For more episodes of Invest Like the Best, visit joincolossus.com/episodes.  Past guests include Tobi Lutke, Kevin Systrom, Mike Krieger, John Collison, Kat Cole, Marc Andreessen, Matthew Ball, Bill Gurley, Anu Hariharan, Ben Thompson, and many more. Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here. Follow us on Twitter: @patrick_oshag | @JoinColossus Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com). Show Notes: [00:00:00] Welcome to Invest Like the Best [00:01:06] First Question – Advantage of being in Middleburg, Virginia [00:02:11] What a day looks like for Chuck [00:03:06] Why imagination is more important than knowledge [00:03:38] Difference between curiosity and imagination [00:04:38] The origins of the Nirvana Three-Legged Stool concept [00:10:14] First leg of the stool, extraordinary business and ROE’s with a focus on Bandag [00:14:36] How his evaluations of value have changed over the last 10-15 years [00:16:10] A look at recent businesses that he’s bought and why they are interesting [00:19:56] Why they keep things simple [00:21:35] Second leg of the stool, the people involved and characteristics of managers he has invested in [00:23:20] Role of capital allocation in the people he focuses on [00:29:34] Third leg of the stool, reinvestment [00:21:09] How does he think about diversifying across an investment area [00:33:32] Great businesses wrapped in a bad balance sheet [00:37:35] What would cause him to sell [00:38:52] What does he look for in people [00:43:27] How curiosity has impacted his interest in land conservation [00:43:51] Advice for investors, especially younger ones [00:46:14] Kindest thing anyone has done for him

Transcript

Click on a timestamp to play from that location

0:00.0

This episode is brought to you by TIGAS, the modern research platform for leading investors and the provider of Canilist.

0:06.0

Tired of calculating fully diluted shares outstanding,

0:09.0

access every publicly reported data point and industry specific

0:12.6

KPI through their database of over 4,000

0:15.7

driveable global models, hand built

0:17.8

by a team of sector-focused analysts,

0:20.4

35-plus industry comsheets, and Excel add-ins that let you use their industry-leading data in

0:25.3

their own spreadsheets.

0:26.3

Tegesis models automatically update each quarter, including hard to calculate KPIIs like

0:31.0

stock-based comp and organic growth rates, empowering investors to

0:34.3

bypass the friction of sourcing, building, and updating models. Make efficiency

0:38.1

your competitive advantage and take back your time today. As a listener you can

0:42.1

trial candlest by Tegis for free by visiting

0:44.5

Tegis.co slash Patrick. I'm endlessly fascinated by people who are doing their life's

0:49.8

work and David Senra gets about as close as you can in his crafting of the Founders Podcast.

0:55.0

Each week David gives you ideas you can use in your work revealed by the life stories of history's greatest entrepreneurs.

1:01.0

He connects the legacies of the likes of Kobe Bryant to Estay Lauder to Winston Churchill and the list goes on.

1:06.0

He recently put out a new favorite episode on Anna Wintour.

1:10.0

Founders Podcast will undoubtedly light a spark of ambition and hate all of us in our quest towards our life's work.

1:16.0

David isn't stopping anytime soon. In fact, if you ask him, he's just begun.

1:21.0

I'm proud that Founders is part of the Colossus network and you can find a link to this

1:24.7

treasure trove in the show notes.

...

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