“I constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines. They go to bed every night a little wiser than they were when they got up and boy does that help, particularly when you have a long run ahead of you.”
– Charlie Munger
How do some people get wiser than other people? What are the common principles followed by the investors who made it big and have continuously been successful? In one of the most profound speeches given by Warren Buffett in 1984, he discerned the traits of investors who have successfully beaten the S&P 500 index over the long-term. The majority of them, not necessarily, had the same investment style, but yet, mentally, they were always found buying the business and not buying the stock. This was combined by their intellect, character and temperament.
Fast forward today, and we have seen the rise of a new cohort of Superinvestors with as diverse styles, but the common trait of being a business analyst and not a stock analyst remains the same. The purpose of The Investing Principles (TIP) is to learn from their varied styles and imbibe them in one’s life-long journey of investment learning.
Myself
Hello, I’m Guneet Sahni, and I started my investing journey as a professional investor during the GFC era of 2008. I have dabbled across various styles until I was fortunate to imbibe the pearls of wisdom of Warren Buffett, Joel Greenblatt and Michael Mauboussin into my investment framework.
I have been fortunate to move across various departments at my previous firm at Credit Suisse. I launched and managed a special situation AMC focused on spin-offs (US, Canada & Europe). I also had the opportunity to manage the India discretionary mandate for Credit Suisse.
I was born and brought up in India and have been fortunate to work across three continents to finally immigrating to Canada in 2021. Academically, I am both a CFA and MBA, but nothing compares to what I have learned practically in the markets. My portfolio comprises 65% of stocks from India and the remaining 35% from the US/Canada.
Investment Philosophy
My investment philosophy is “Keep it Simple”– identify great companies with the potential to create value. That sounds easy, right? But how to determine 1) great companies and 2) assess value creation. My mental model makes it simpler: Real value is only created when the present value of (Net Operating Profit after taxes – Invested capital) exceeds market-implied expectations in the stock. The remaining measures mostly talked about (like PE, growth, etc.) are either the drivers of this or an easy way of public communication. Identifying catalysts driven investment ideas that can narrow the divergence between price and value to avoid the pitfall of falling into a value trap remains one of my decade-old investing career’s edge.
I combine the investment styles of Warren Buffett-led quality companies (like Rails, businesses with low reinvestment needs) to Greenblatt’s special situations (like Carrier) to make a portfolio of a core-satellite stock. While a significant amount of portfolio returns are either straight [15%, 15%, 15%, 15%, 15%] or lumpy [50%, -20%, 30%, -10%, 43%], a common error that an investor make is to deviate in between when one is underperforming the other. However, I believe that having a core-satellite approach helps in enjoying the best of both worlds. This blog’s objective will be to dissect the learnings from both styles of investing.
As I tread along the path to writing my investment journal in pursuit of learning from the smart people around, it will always be a pleasure to connect with fellow market participants.
I’m also open to any potential opportunities. I could be reached at – theinvestingprinciples@gmail.com or Twitter.