We are pleased to present an exclusive interview with Paul Johnson, portfolio manager of Nicusa Capital and adjunct professor at Columbia Business School.
Paul Johnson launched Nicusa Investment Advisors in 2012 to advise CEOs and Boards of Directors on dealing with operational and financial strategy, capital allocation, shareholder value creation, and corporate communications. Paul applies his 35 years of experience as an investment professional, combined with his 25 years as a business school professor, to help senior managers address these critical strategic issues. Paul is the founding partner and investment manager of Nicusa Capital Partners, a private investment partnership that he started in 2003. As an investor, Paul has invested in virtually all sectors of the economy.
The Manual of Ideas: Tell us about the background and history of your firm.
Paul Johnson: I launched Nicusa Capital Partners on April 1, 2003. My goal was to combine my experience analyzing companies as a sell-side research analyst, with my investment philosophy developed while teaching as an adjunct professor, to execute a long-term-oriented investment strategy.
My experience running the fund has reinforced three lessons: investing in high quality businesses is critical to being able to own them long term, our entry price is the key determinant of our return, and our investment thesis almost always takes longer than hoped to unfold.
From the beginning, we have tried to buy great businesses cheaply. Finding great businesses with attractive valuations takes time and work. We run a concentrated portfolio because not many companies fit our criteria. Because the fund is relatively small we can invest in small- and micro-cap companies, a segment of the market offering great investment opportunities if one is willing to do the work. Our holding period is long by Wall Street standards, which adds to the importance of buying great businesses.
My experience running the fund has reinforced three lessons: investing in high quality businesses is critical to being able to own them long term, our entry price is the key determinant of our return, and our investment thesis almost always takes longer than hoped to unfold.
MOI: As adjunct professor of finance at Columbia for nearly two decades, you’ve probably seen some of your students go on to become great investors. Do the great investors share any traits that stood out while they were still your students?
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