Thelilyinvestor Posted February 22, 2022 Share Posted February 22, 2022 Recently I have been reading Rob Vinall´s letters and I find him a very interesting investor to keep an eye on. Anyone else who is following him? Link to comment Share on other sites More sharing options...
elliott Posted February 22, 2022 Share Posted February 22, 2022 (edited) I have been following him for a few years. I like his investment philosophy, and I am glad he is so successful (20% CAGR since inception, about 14 years ago if I am not mistaken). However, I do wonder how much of his performance is due to him finding great businesses vs his style matching what has become hot. It is one thing to see your investments share price go up like crazy while they also grow revenues, quite another to see your invesments share price going up AND not only grow revenues but becoming profitable to the point of matching their valuations. To be clear, though, I am perfectly aware not all of his investments are high growth + (according to management) soon profitable. Edited February 22, 2022 by elliott added "hopefully" Link to comment Share on other sites More sharing options...
throw123 Posted February 22, 2022 Share Posted February 22, 2022 4 minutes ago, elliott said: I have been following him for a few years. I like his investment philosophy, and I am glad he is so successful (20% CAGR since inception, about 14 years ago if I am not mistaken). However, I do wonder how much of his performance is due to him finding great businesses vs his style matching what has become hot. It is one thing to see your investments share price go up like crazy while they also grow revenues, quite another to see your invesments share price going up AND not only grow revenues but becoming profitable to the point of matching their valuations. To be clear, though, I am perfectly aware not all of his investments are high growth + (according to management) soon profitable. I read his letter and walked away with the impression it was his style matching the market. not sure i would expect the same over the next decade Link to comment Share on other sites More sharing options...
Thelilyinvestor Posted February 22, 2022 Author Share Posted February 22, 2022 If you read his letters all the way from 2008, you can see various phases: 1) 2008-2014 Deep Value coming out of the financial crisis, focused on financials and small caps 2) 2015-2019 High Quality Companies 3) 2019-2022 Future High Quality Companies I find that he is a great investor to study as he is open in his letters, speaking about what he is learning about + his investing thesis on each new investment, which I believe is a great insight for those investors who like to "clone" other investors. Almost all of his investments have crashed in the last 3 months, so could be an interesting hunting ground. Just my opinion Link to comment Share on other sites More sharing options...
elliott Posted February 22, 2022 Share Posted February 22, 2022 52 minutes ago, Thelilyinvestor said: Almost all of his investments have crashed in the last 3 months, so could be an interesting hunting ground. Just my opinion thats exactly what I am doing, even if, at least partially, I agree with throw123. RVs returns for the next decade might not be so good anymore. Link to comment Share on other sites More sharing options...
Thelilyinvestor Posted February 22, 2022 Author Share Posted February 22, 2022 2 hours ago, elliott said: thats exactly what I am doing, even if, at least partially, I agree with throw123. RVs returns for the next decade might not be so good anymore. Agreed as the last decade has been a very good one. I also believe he has high chances of him beating the market, but only time will tell. Link to comment Share on other sites More sharing options...
elliott Posted February 25, 2022 Share Posted February 25, 2022 By the way, have you followed the case of Grenke? In 2020, a short seller published a report on Grenke where they... quote from a rv letter Quote claimed that Grenke is a fraud, i.e. its lease receivables are worthless, its dealer network fabricated and its cash non-existent. These allegations [RV states his opinion here] are, frankly, absurd. However, looking at Grenke I just found out that they were later (I dont know if because of the reort) subjected to two special audits from a German regulatory body - Bafin. Bafin found several accounting defficiencies. For example... quote from Grenkes newsletter Quote Another point of criticism expressed by BaFin relates to the impairments of lease receivables and the related determination of risk provisioning. BaFin points out that, in its opinion, the lease receivables reported under current assets were reported too high. [...] BaFin states that, in its opinion, the related impairment test was not based on the planning that applied on the valuation date, but on overly optimistic revenue estimates and an excessively low cost growth factor. I dont know how "big" the figures related to these defficiencies are since I have not work on this yet, but still, its not the kind of thing you want to hear from any company. Following this, there seems to have been changes in the executive office and the board. Link to comment Share on other sites More sharing options...
elliott Posted February 25, 2022 Share Posted February 25, 2022 By the way, I remark this case because RV pays a lot of attention to management. He specifically has mentioned several times how important it is to have managers with integrity and skin in the game. He usually interviews with leaders in the businesses he invests in to get to know them, and I think that must have been the case with Grenke, given their relatively small size and how close they are physically. Link to comment Share on other sites More sharing options...
Thelilyinvestor Posted February 25, 2022 Author Share Posted February 25, 2022 4 minutes ago, elliott said: By the way, I remark this case because RV pays a lot of attention to management. He specifically has mentioned several times how important it is to have managers with integrity and skin in the game. He usually interviews with leaders in the businesses he invests in to get to know them, and I think that must have been the case with Grenke, given their relatively small size and how close they are physically. Agree, for what I understand, his first criteria is having passionate founders with skill and integrity. I think he has done an excellent job finding great business operators, but here he might have been wrong. So the question is: Does he have a good eye for managers and this is just 1 case he was wrong? Or he has an average ability to figure out great managers? Link to comment Share on other sites More sharing options...
Spekulatius Posted February 25, 2022 Share Posted February 25, 2022 Grenke has some serious issues as far as management is concerned. If that management is looking good to RV, I don't think their vetting process is worth much. I also think the fact alone that Bafin (which is pretty toothless and incompetent) find several issues with Grenke is a huge red flag. Link to comment Share on other sites More sharing options...
elliott Posted April 16, 2022 Share Posted April 16, 2022 in the recent investors meeting, Vinall was asked about Grenke. it seemed to me that he does not think management did anything really wrong (or so bad, maybe) to have been subjected to such scrutiny by Bafin, and that what happened is in great part Bafin overdoing it to make up for some case or another where Bafin did not do their job Link to comment Share on other sites More sharing options...
Spekulatius Posted April 16, 2022 Share Posted April 16, 2022 (edited) 13 hours ago, elliott said: in the recent investors meeting, Vinall was asked about Grenke. it seemed to me that he does not think management did anything really wrong (or so bad, maybe) to have been subjected to such scrutiny by Bafin, and that what happened is in great part Bafin overdoing it to make up for some case or another where Bafin did not do their job BaFin overdoing it. - LOL. This Institution had been napping for a decade. Just from his investments (CVNA, Grenke) , one can tell that Vinod doesn’t look much under the hood. Edited April 16, 2022 by Spekulatius Link to comment Share on other sites More sharing options...
LakesideB Posted April 16, 2022 Share Posted April 16, 2022 Spekulatius, interesting comment on CVNA. Superficially can see why CVNA : large amount of debt + no free cashflow + prior actions of senior Garcia. Curious to know if you had an opportunity to look under the hood and you found something that gave you a pause or you hold that sentiment due to the above mentioned factors? Txs. Link to comment Share on other sites More sharing options...
Monsieur_dee Posted May 11, 2022 Share Posted May 11, 2022 Rob tripled down with Carvana here. Probably under water heavy here. Link to comment Share on other sites More sharing options...
Thelilyinvestor Posted May 11, 2022 Author Share Posted May 11, 2022 1 hour ago, Monsieur_dee said: Rob tripled down with Carvana here. Probably under water heavy here. Yeah... but you have to admire his strong conviction on a very uncertain situation... Link to comment Share on other sites More sharing options...
Guest Posted May 11, 2022 Share Posted May 11, 2022 5 minutes ago, Thelilyinvestor said: Yeah... but you have to admire his strong conviction on a very uncertain situation... I have no opinion on it. There are plenty of bullheaded people who had great records and blew themselves up over it. Just off the top of my head Goldfarb, Miller, Berkowitz, etc. Link to comment Share on other sites More sharing options...
formthirteen Posted May 11, 2022 Share Posted May 11, 2022 (edited) 25 minutes ago, Thelilyinvestor said: Yeah... but you have to admire his strong conviction on a very uncertain situation... Putting +50% of your clients' money into subprime subprime auto lenders at the top of a bubble is something I don't admire. I admire the natural attraction of optimistic risk takers (Rob, CACC, CVNA). CACC's website: Quote BAD CREDIT? FIRST TIME CAR BUYER? We can help you get approved for auto financing regardless of your credit history Quote We believe everyone deserves a second chance, which is why we enable dealers enrolled with Credit Acceptance to approve everyone, including customers with any of the folllowing: Bad credit history No credit history Fixed income Unemployment income Multiple open auto loans Multiple repossessions Self-employed income Temporary income Bankruptcy Chapter 7 Bankruptcy Chapter 13 (with court/trustee approval) Can't get a loan, don't worry CACC will give you one in 30 seconds. Can't sell your car, don't worry CVNA will buy it without inspecting it. What could go wrong? Edited May 11, 2022 by formthirteen Link to comment Share on other sites More sharing options...
Thelilyinvestor Posted May 11, 2022 Author Share Posted May 11, 2022 I am just saying that he has high conviction on this, he might be wrong, but he also might understand something we dont understand. Time will tell... Link to comment Share on other sites More sharing options...
Guest Posted May 11, 2022 Share Posted May 11, 2022 Just now, Thelilyinvestor said: I am just saying that he has high conviction on this, he might be wrong, but he also might understand something we dont understand. Time will tell... I'm quite confident he knows less about CVNA than Lampert knew about Sears. Link to comment Share on other sites More sharing options...
formthirteen Posted May 11, 2022 Share Posted May 11, 2022 (edited) 14 minutes ago, Thelilyinvestor said: I am just saying that he has high conviction on this, he might be wrong, but he also might understand something we dont understand. Time will tell... I also admire his high conviction and would like to have it at times, even when I'm wrong. I think the optimism and conviction is Rob's biggest strength. I took notice of it when listening to his "2021 results" podcast. Sometimes you can win just because you believe in something and don't give up. However, sometimes there's nothing to understand and you get blind to the facts, then the blind optimism is a weakness. That's how I see this, there's nothing I need to understand with so many red flags, which also makes me blind. Anyways, I'm sure CVNA and CACC might be fine 10 years from now. Rob will probably win in any case, right or wrong, he's already earned his fees. Edited May 11, 2022 by formthirteen Link to comment Share on other sites More sharing options...
UK Posted January 17, 2023 Share Posted January 17, 2023 Link to comment Share on other sites More sharing options...
changegonnacome Posted January 17, 2023 Share Posted January 17, 2023 RVCapital it seems suffered from kind of style drift.........he started of as value-ish, then GARP.......but GARP worked so well during ZIRP in the late 2010's & his returns so good.....that he went from growth at a reasonable price to growth at any price and ended up owning Carvana in the end with shit loads of debt and growth that had to happen to keep the whole enterprise afloat......difference between RVCapital and Clifford Sosin's/CAS Parters.....who i think RVCapital coat-tailed into Carvana is that at least Rob didn't let Carvana get to be 60% of the fund......and so he'll live to fight another day. Regardless Rob has shown an ability to make the right calls on idiosyncratic ideas. The stuff he does with emerging managers is also to be commended. I would say the price for long-term outperformance in a fund managed by competent manager is occasional & sometimes spectacular underperformance....its to be expected when you hold things that don't look like the index & the cruelty that is mark-to-Dec 31st which by luck alone makes some managers look like geniuses or losers (for a short time). Link to comment Share on other sites More sharing options...
Dinar Posted January 17, 2023 Share Posted January 17, 2023 How do his returns in USD compare to the S&P 500 since inception? Link to comment Share on other sites More sharing options...
Spekulatius Posted January 17, 2023 Share Posted January 17, 2023 Every manager who holds a large position in CVNA needs to consider their analytical process. This blowup wasn't exactly hard to predict. I do think that @changegonnacome is correct that style drift occurred with many money managers because it worked very well for some time. Link to comment Share on other sites More sharing options...
changegonnacome Posted January 17, 2023 Share Posted January 17, 2023 (edited) 3 hours ago, Dinar said: How do his returns in USD compare to the S&P 500 since inception? See below - European manager so EUR investor base........as European manager then your benchmark isn't really SPY.....however....returns net of fees annualized & including the 2022 drawdown for fund come out at a 12.4% CAGR Edited January 17, 2023 by changegonnacome Link to comment Share on other sites More sharing options...
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