Impressions from Ideaweek St. Moritz 2019 (Update 5)

February 16, 2019 in Diary, Featured, Ideaweek

The following update is shared by John Mihaljevic, chairman of MOI Global, with input from selected Ideaweek participants.

Be sure to review timeless insights from Ideaweek St. Moritz 2018 as well.

I am pleased to include below selected Ideaweek impressions, shared by this year’s participants. I hope you’ll pardon the hyperbole in some of the takeaways — it was a fabulous week, but this was entirely due to the quality of the participants themselves. My job was easy: Get smart people together and don’t stand in the way of serendipity!

Elliot Turner, Managing Director of RGA Investment Advisors in Stamford, Connecticut, journaled his Ideaweek experience. Here is an excerpt, highlighting a few themes and conversations:

  • Investing is really hard. It’s hard not to dwell on that sitting in a room with brainpower that rivals a well-positioned datacenter. Worse yet, we’re inherently climbing uphill against behavioral limitations and base rates which suggest failure is far more common than we like to believe as investment managers.
  • How should we think about position management? Is the use of “turnover” in describing my own strategy descriptive or prescriptive? The goal is to be descriptive, but can one behaviorally separate the communication of a target from it becoming an actuality?
  • The perspective of Europeans on this moment in history between Brexit, the EU crisis, the yellow vests and the rise of nationalism alongside our place as Americans in this big mess. This is something I have largely been lacking from my seat in the US.
  • Is “technology” an appropriate label for a sector or a business? Have we reached a place in the Internet’s history where we can isolate the business as separate and apart from “technology” or is there a chronically volatile landscape that we should fear amidst rapid change?
  • Several fascinating business models including “plastic crack for nerds,” “big fish in small ponds,” the “repurposing of commercial real estate” and how to change behavior and share risk using data. We need to consider all kinds of leverage, including “reputational leverage.”
  • How to be a better parent. “Your kid is not your ego.” Look for latent tendencies and observe what inspires your child(ren). Talk to your kids as adults.
  • How to learn and the meaning of life — in an engaging conversation on the Art of Learning we started with how a chess master was able to “hack” the learning curve and become a Tai Chi master. We moved to a somewhat open-ended exploration on the meaning and origin of life and the role of spirituality.
  • How do you start small and build a great investment firm? What are some best practices? What kinds of communications resonate with the right target audience(s)? How do you institutionalize a decision-making process that takes opinions from a handful or more people, makes the best decisions possible, while also letting everyone involved feel like a stakeholder?
  • Who are some of the under-the-radar, outstanding investors that share their thought process and ideas? I left with a huge list of YouTube videos and Podcasts to track down on a variety of topics. Special shout-out to Paul Lountzis’ “On Differential Insights.”

Elliot delivered a structured talk to the group on the topic of position management:

“I was a little nervous picking this topic, because it’s something I think about a lot though hardly see any literature on. I spoke about how I never buy my full position right away and take at least a quarter to round out to target size. I find considerable benefit from this “imposed patience,” because in the transition from observer to owner you take what’s a backward looking narrative and start watching the world in a hypothesis–>test mode. In doing so, you can strip away some of the biases and perhaps even glean insight into key inflection points on your thesis along the way. It was amazing to see how much the topic resonated with so many in the room.”

“The talk turned into a moderated discussion with outstanding contributions from the field and a fascinating book recommendation, The Art of Execution. As an avid reader, I am embarrassed to admit that I didn’t know this book existed, alas I am lucky to now have it high up on my reading list. Position management became a topic that just about everyone spoke about in more than one context for the remainder of the trip. The pent-up interest in the topic makes me wonder what other topics we all as investors think about, though don’t speak much about. Perhaps something like “scuttlebutt techniques” fits the bill?”

Gary Mishuris, Managing Partner and Chief Investment Officer of Silver Ring Value Partners, based in Boston, highlighted the following insight gleaned during Ideaweek:

“A fellow participant described how he made ~7x investing in a Brazilian retailer in 2015, yet considered the investment a mistake. He had analyzed a competitor that had an improving online business model; he dismissed it and ended up missing out on a ~100x return. The insight was to not just look for good businesses, but to focus on increasingly good businesses. As a result, I will go through my portfolio and other companies I cover and grade them as to whether they are structurally getting better, worse, or staying the same, in addition to my usual process of rating how good they are at a point in time. Direction of change can be more important than the level.”

Serge Belinski, Founder of Value Holdings SAS, based in Paris, summed up his experience as follows:

“Ideaweek was an incredible opportunity to learn from people of various experiences and horizons in a friendly atmosphere. In a matter of days, I came back with great insights on investing, entrepreneurship and even parenting: How can we possibly ask for more?”

“Experienced entrepreneurs showed me how it is possible to use both opportunities and mistakes as assets to achieve desired outcomes. Experienced investors generously shared their investment frameworks and outcomes while younger, promising investors with different investment processes also helped enrich my view of the world.”

Sid Choraria, Portfolio Manager of Asian Equities at Amiral Gestion in Singapore, commented:

“Ideaweek was the best investment conference I have attended in my investing career, it was transformational and life changing in many ways. Set in a dream setting in St. Moritz, Switzerland, John handpicked an exceptional group of value investors from 25+ countries, bringing unique experiences from family offices, sovereign wealth funds, allocators, portfolio managers, and analysts from the U.S., Asia, Europe, and entrepreneurs who have founded their own investment companies.”

“The right balance of investment and non-investment activities made for an ideal setting to learn and reflect on investment successes and mistakes. This sets Ideaweek apart from any other conference in the world. I was blown away by the talent in the room but, importantly, what set the group apart were humility and curiosity, despite everyone being very accomplished already. I have been to other conferences at which ‘star’ investors pitch their ‘best’ ideas – and have come away less than impressed. Ideaweek was the perfect setting and I would be honored to attend every year and any event organized by MOI Global. If John is there, count me in!”

“There were many exceptional conversations — I’ll mention two of them: A conversation with Chris Mayer, author of my favorite investment book, 100 Baggers, reinforced the importance of reinvestment opportunities. I also had a profound conversation with Henry Patner, one of the smartest investors I have ever met. The conversation centered on investing in Asia, focused on wonderful businesses at wonderful prices. It reconfirmed the validity of Charlie Munger’s advice, to ‘fish where the fish are.'”

“I came away excited about the opportunity in relatively inefficient Asian markets for my multi-decade life journey as an investor. Ideaweek showed just how smart some investors are in the U.S. and Europe. Asia does have less competition and reinvestment opportunities are large. To quote my favorite company in Japan, Kobayashi, I want to be a ‘big fish in a small pond’, fishing in Asian markets for the rest of my life.”

David Eborall, Director of Investments at SaltLight Capital Management in South Africa, observed: “Sometimes it’s a simple statement from which a bounty of knowledge can be gleaned. I observed that investors are becoming more entrepreneurial (perhaps by necessity), and the traditional investment business model of gathering a few clients in segregated accounts is morphing into entrepreneurs with many lines of business. My favorite topics were position execution, tending to your environment, and the many book ideas I received.”

Gary J. Yarus, President of Diversified Capital Corporation, based in Miami Beach, Florida:

“Ideaweek presented an amazing opportunity to interact, share, and grow. At home, in Miami, Florida, I have known my colleagues for years. We share ideas regularly. In fact, I know what their advice would be in advance. What a rare opportunity John provided for us: Place a dynamic, proven, talented group of advisors, who had not met before, in a remarkable setting…. and, wow! My perspective was broadened by our interactions. Going forward, my outlook will be more global, as our meeting sparked my interest in international and emerging markets. I thank you all for a terrific and stimulating week, and thanks for the concrete takeaways.”

Anuj Didwania, Chief Investment Officer of Redart Capital Advisors in Mumbai, India, reflected on a conversation with a fellow participant:

“We discussed the factors that lead to wealth creation in a country or community. For example, Japan rose like a phoenix (economically speaking) from the devastation of World War II. And yet, regions within Japan had divergent GDP-per-capita growth, i.e., some regions were more affluent than others. We found this fascinating considering that the regions tended to have similar factors at play in terms of the government, legal system, cultural background, educational level, etc. It was fascinating to try to decipher the reasons for the differences in economic success in light of the geographic proximity of the various regions.”

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Here’s to a terrific year and to seeing you (hopefully) at Ideaweek St. Moritz 2020!