We had the pleasure of interviewing Christopher Begg, Chief Investment Officer of East Coast Asset Management, based in Essex, Massachusetts. We have enjoyed and learned from Chris’s letters over the years and are grateful to fellow member Joe Weidenburner for making this interview possible.
MOI Global: Please tell us about the genesis of your firm and the principles that have guided you since then.
Christopher Begg: I started working in the investment business in 1994 directly after graduating college. I was lucky enough to have discovered Warren Buffett and Ben Graham through my college years and their rational wisdoms were seeds sewn early, even though I may not have fully appreciated all of the lessons at that time. The intellectual challenge of solving puzzles that were forever changing captured my attention right away and still does. Before launching East Coast in 2008 I had two jobs post college, both as a research analyst/portfolio manager where I was given autonomy to read a lot, study business models and learn what kind of investor best matched my temperament. I think anyone learning a craft is best served by finding a mentor or choosing the right heroes. Personally, choosing the right heroes has had the largest effect on my own education, but I tell my students that the mentor track can amplify results if you are lucky to find one who will teach you and if you choose wisely. I spent 15 years building my investment process and philosophy through my own trials and errors and as much as I could through understanding the trials and errors of other investors. As Emerson said, “It is the wounded oyster that mends its shell with pearls.”
The two principles that have guided East Coast since inception are Distinction and Safety. On distinction, the words of Sir John Templeton capture the essence of our belief – “It is impossible to produce superior performance unless you do something different from the majority.” Toward this end, we have built East Coast with the realization that superior returns and low risk over a long duration will be the result of a differentiated approach. Our growth and joy in doing what we love will be directly correlated to our ability to harness velocity over mass. Having the right partners, the right geography to think independently in accord with nature, and the right team who are interested in winning together over the long-term all needs to be a deliberate intent if we are to arrive at distinction. On safety, we define this as the margin of safety every investment has, given the incessant realities of change. A dynamic of win-win relationships across all counterparties will determine an organization’s sustainability so we look carefully at this attribute of our investments and of East Coast introspectively. Applied to our investment process, Distinction is first how we think about the Quality of the Business and Safety is how we think about the Quality of the Investment.
MOI: You lay out your investment philosophy in a compelling way in your quarterly letters. For example, you have written about lessons from the Grove of Titans in Jedediah Smith Redwoods State Park in California. How important is non-investing insights and Munger’s “latticework of mental models” to your philosophy as an investor?
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