The Search for the Next "Outsider"

[Thelilyinvestor]

We all know these amazing management teams and capital allocators, your typical Warren Buffett, Mark Leonard etc. But they are already big and constrains of too much capital are always on the horizon.

 

I thought it was a great idea to start this topic of the next great capital allocators, who are still for the most part unknown. Just having 1 of these "outsiders" early enough in their journey can be the easiest way to hit a big home run by just trusting management.

 

I personally have identified the management team of Terravest - TVK as one of the best out there, and they are still a very small company.

Also, Brett Kelly from KPG is a potential great capital allocator still young enough in his journey

 

Anyone out there that wants to share some of these "Outsiders" so we can all profit from it?

 

Thanks!

Edited March 28 by Thelilyinvestor

[valueventures]

This is a great idea - thank you for starting this thread! I recently started a position in TVK. 

 

One *potential* (still to be proven, keep an eye on) suggestion is Savneet Singh at PAR. He is a big Buffett fan: https://medium.com/@Savneet/building-the-berkshire-hathaway-of-software-4ec6a1b25e26. Essentially, he has sought to create the dominant unified end-to-end technology stack for restaurants (mostly QSR). PAR has executed a number of acquisitions (MENU, Punchh, and most recently Stuzo and TASK) to broaden its offering and extend its reach. If he can scale ARR and get the company in a better position on cutting costs and improving profitability, this could be a real winner. 

 

So far, this has not yet translated into much value for shareholders, so definitely too early to call him a "successful" outsider, but I'm increasingly thinking this space will be a "winner take most" market and that PAR is positioning itself well for that.

 

[Eldad]

They have to be a little strange to be like Buffett, Munger, Leonard. Truly an outsider. 
 

The level of decentralization those three embrace is counterintuitive and probably impossible for most high functioning business executives. 
 

Then there is the commitment to never sell a wholly owned business. 
 

ROP is very good at the decentralization part but they sell too many businesses for them to become elite like the BRK and CSU (and probably lack the price discipline) 

 

Like Munger says, it’s a tough ask for your great operator to also be a philosopher King. Look for the philosopher king that outsources the operations to the subs. 
 

I like Terravest too but I think they probably have too much Clarke in them to build it for a lifetime. 
 

 

[james22]

Michael Saylor

[Eldad]

53 minutes ago, james22 said:

Michael Saylor

Definitely an outsider. IMO more Adam Neumann than WB but we will see. 

[Saluki]

I've heard the author say that you should look for the next outsiders from the people who worked there with the current outsiders. 

 

Bruce Flatt at Brookfield came up under the Brascan guys, for instance.

 

In that vein, I was very impressed with David Sokol's turnaround of Atlas.  One of Buffets three Ts (Ted, Todd and Tracy) started a VC firm, but haven't heard from her since. 

 

Did Singleton have any underlings? 

[SongDonkey.AI]

2 hours ago, Saluki said:

 

Did Singleton have any underlings? 

Teledyne is still thriving. Robert Mehrabian used same playbook as Singleton, basically.

[valueventures]

TransDigm Group (TDG) was mentioned in the book and has since continued to perform very well. There is a thread on it within the Investment Ideas forum.

Edited March 28 by valueventures

[Spekulatius]

Kestenbaum and STLC come to my mind. Lousy industry though.

[Jaygo]

Capital allocation skills have a moving goal post from era to era. For instance buybacks are very popular and a like a big pair of tits to the "above average" investor, Its all we can focus on. Shrinking equity will have a time and a place and but doing it constantly is not going to land you in the time or the place every time you purchase shares with the shareholders money.

 

The guys today who are the best capital allocators are the ones who are building. If Jeff Bezos doesn't go down as the best of all time I am simply perplexed. Using money to make more money should be the constant goalpost and nobody has spent more than JB at amazon to create more.

 

I'm going to shout out Mike Pyle of Exchange income corporation for some pretty interesting acquisitions lately. He bagged a couple big fish at the start of covid but he may have swallowed the lure himself with BV glazing at a cycle high in curtain walls ( unlikely due to shit tons of housing and retrofits needed but the current gulch must be traversed). Lower rates need apply. 

 

Brad Jacobs is another who deserves honorable mention and while certainly not unknown nor camera shy he is still in the building stage of his CA Career.

 

Buffett mapped it out to all of us. He may not have been the first but he was the most generous with his knowledge and now we can all think and hopefully act more efficiently with our money.