A member emailed me a few days ago, voicing a concern:

“MOI Global provides a great avenue to meet/discuss with like-minded investors and I thank you for that. My only caveat is with regards to the online conferences… I am still trying to figure out why would anyone pitch their best ideas (especially if they are small and micro caps) as it would bid up the price of an asset that they would/should want to purchase more of? The only way that would make sense is if they were looking to exit the investment. This is somewhat concerning and I was wondering if this is something that has crossed your mind. There may be an inherent conflict of interest.”

It’s a good question. I’m not sure there is an answer, but I’d like to share a few observations.

First, I believe people generally overestimate the likelihood that sharing an idea will have a material market impact. Every quarter, some of the world’s best investors reveal their holdings in a 13F-HR filing with the SEC. The fact that this is done with a 45-day delay does not negate the fact that prices do not seem materially impacted by the disclosures. Even a revelation of a new holding by Berkshire Hathaway does not typically cause a spike in the related stock price. Similarly, when well-known activists with long records of outperformance share their research, they typically do so with little, if any, immediate market impact. It does take considerably less to move a micro-cap stock. Still, many small companies have been known in value circles for years, yet their prices remain at wide perceived discounts to intrinsic value.

Second, quite a few investors, particularly in the MOI Global community, are genuinely motivated by a desire to learn and test their investment theses by soliciting opposing viewpoints. Presenting at an MOI Global online conference — or at many other conferences — provides an opportunity to engage with like-minded investors who may have new information, insights, or thought-provoking questions.

Third, it is hard to find an investment manager who does not appreciate greater interest in his or her investment firm. A well-researched presentation serves as somewhat of a “business card”, a way of introducing the manager to potential clients in a favorable light. The manager does not come across as asking for money but rather as a thought leader. While we discourage marketing pitches, a manager is absolutely welcome to highlight his or her background and investment philosophy to set the stage for the idea about to be presented.

Fourth, different instructors will have different motivations. While it’s impossible to gauge those motivations with confidence, the listener can set some (dis-)qualifying parameters. For example, I tend to be less interested in ideas that have tripled in price in the past year than in ideas that are down 50%. This is not only because, philosophically, I get more excited about beaten-down opportunities. Of greater significance for the issue at hand, it seems more likely that an instructor sitting on a triple may have a less-than-sincere motivation than an instructor whose idea has been cut in half — or do you know someone who likes to advertise a losing position in the hope of exiting it a few percentage points higher?

Fifth, MOI Global online conferences are in their seventh year at the time of this writing, with four distinct events per year — the Best Ideas conference (January), Asian Investing Summit (April), Wide-Moat Investing Summit (June), and European Investing Summit (October). Numerous instructors have presented more than once. As past sessions are archived and accessible to members, it is possible to review each instructor’s “track record”. Such a review is unscientific as the sample size for each instructor is small, but clues are available to those willing to dig deeper. Often, the most value-added instructors are long-term investors who are open-minded about their process and ideas. Once they have built a full position in a security, they are quite willing to share their research and engage with fellow members of the community.

It’s always good to maintain a healthy dose of skepticism, and it’s imperative to do your own work. Taking these assumptions as given, I believe one can learn quite a lot from many of the presentations at MOI Global online conferences. In the past, sessions have offered differentiated industry insights, dissected misunderstood business models, profiled exceptional owner-operators, identified great businesses deserving of “watchlist” status, and highlighted compelling and timely ideas.

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