Richard Simmons on Competitive Advantage, Family-Controlled Businesses, and Distraction

We recently had the pleasure of interviewing Richard Simmons, investment adviser at Derby Street Investments, a division of Credo Group. Richard was an instructor at European Investing Summit 2017.

The following transcript has been edited for space and clarity.

MOI Global: Tell us about the genesis of Derby Street Investments and the principles that have guided you.

Richard Simmons: Derby Street Investments was inaugurated in early 2013 and it employs the same value strategies in funds, in the UK, Euroland and the US, as the managed accounts do. The principles? Independence of mind, first: we are not copying other managers, following “the market” or looking at research. Secondly, risk aversion. We don’t put much capital into highly-indebted, loss-making or difficult to forecast businesses. And finally, obviously, a focus on value which most broadly means paying less for a security than the present value of its likely cash flows.

I started investing privately while I was still working in commercial banking in the 1990s. By the time I considered a career change, I was obsessed with securities. They seemed both alluring and difficult to understand. Like many investors of my character – phlegmatic, controlled, mathematical – I was drawn to Buffett and ended up writing a book to justify the enormous amount of time and attention I gave him. Something about that focus must have attracted clients and I set up shop as a regulated investment manager, with managed accounts, in 2001.

MOI: How do you define your “investable universe” and how do you generate ideas?

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