The Canadian Investor - Businesses That Provide Monster Returns (100x Stories with Chris Mayer)

Episode Date: August 31, 2023

Braden sits down with Chris Mayer of Woodlock House Family Capital and author of 100 Baggers to discuss long term investing, characteristics of great businesses, volatility, growth KPIs and serial acquirers. Symbols of stocks discussed: CSU.TO, CPRT, LIFCO, V, MA, WSP.TO, LMN.TO, TOI.TO, NFLX Chris' Website: https://www.woodlockhousefamilycapital.com/blog Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Sign up to Stratosphere for free 🚀 our platform for self-directed stock investing research. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.See omnystudio.com/listener for privacy information.

Welcome back into the show. This is the Canadian Investor Podcast, made possible by our friends and show sponsor, EQ Bank, which helps Canadians make bank with high interest and no fees on everyday banking. We also love their savings and investment products like GICs, which offer some of the best rates on the market. I personally, and I know Simone as well, is using the GICs, which offer some of the best rates on the market. I personally, and I know Simone as well, is using the GICs on a regular basis to set money aside for personal income taxes in April of every year. Their GICs are perfect because the interest rate is guaranteed, and I know I won't be able to touch that money until I need it for tax time. Whether you're looking to set some money aside for a rainy day or a big purchase is

coming through the pipeline or simply want to lower the risk of your overall investment portfolio, EQ Bank's GICs are a great option. The best thing about EQ Bank is that it is so easy to use. You can open an account and buy a GIC online in minutes. Take advantage of some of the best rates on the market today at eqbank.ca forward slash GIC. Again, eqbank.ca forward slash GIC. This is the Canadian Investor, where you take control of your own portfolio and gain the confidence you need to succeed in the markets. Hosted by Brayden Dennis and Simon Belanger. All right, listeners of the Canadian Investor Podcast, we have a special episode. I am joined by Chris Mayer. You run Woodlock House Family Capital. You are the author of

100 Beggar Stocks That Return 100 to 1. I've read it. I know many of the listeners have read it. Probably hundreds of them have read it. So thank you for joining the show here, Chris. Thank you for having me on, Braden. It's good to chat with you. Chris, you and I have gone back and forth a couple of times over calls, emails. I like to think that my investing strategy is very similar to yours and the fact that you and I are pretty lethargic. We don't do a whole lot. And just before we hopped on, you said year to date, your portfolio turnover is zero. And I think that's a commendable stat, to be honest. Yeah. I mean, we were talking about before, kind of the ideal would be zero, that you don't have

to touch everything. Everything you buy, you love, it's great, stays great, and you never make any changes. So yeah, year to date, I haven't turned over the portfolio at all. I have one new position that came as a spinoff. So that's it. So how do you fill most of your time then? Because this is a profession where it's probably one of the only or one of the few professions where inaction leads to great results. But that doesn't mean you're not reviewing portfolio companies, looking at new ideas, turning over new rocks. So how do you fill your day? Yeah, it's a good question. So yeah, there's a lot. Even though portfolio, there's nothing going on there, but there's a lot going

on behind the scenes. So I mean, I'm always working on something with a portfolio company, either talking to somebody who used to work there in some way or other or reading some transcript somebody else did on that kind of thing. So that's a good chunk of time. I talk to other investors, talk to you. So there's a lot of just talking to other people. And then, you know, you're just always doing reading. And when I say also doing work on portfolio companies, and kind of just, just staying, you know, kind of current and keeping your eyes open for anything interesting nuggets, things you didn't know, things staying, things are staying on track.

So that's what I spent a lot of time on. And I assume a lot of that time is also spent on that bookshelf that sits behind you. Yes. I was going to say, I forgot. The other thing is leaves a lot of good time for reading. So there's, you know, I like to also just kind of get away from financial stuff entirely and just, you know, get into a good book and have some time to think. And that's important too.

Love it. All right. So I'll start with a few questions of notes. You know, I looked back on my notes when I made the book and I even did a segment on the pod, maybe two-ish years ago on it. And I was just looking through my notes. And you start the... Correct me if I'm wrong, but you start the book with the coffee can portfolio concept. What is this concept? Why is it important? And how can people use it?

Why is it important and how can people use it? Yeah, so the coffee can portfolio, not my idea. It came up, a guy named Robert Kirby came up with it. He wrote about it in the Journal of Portfolio Management in 1984. And if you Google, you can still find that original article and definitely I would recommend it. Kirby's a good writer. So he was a manager, money manager. And he had this interesting experience where he was managing this one woman's money for years and years and years. And unbeknownst to him, her husband had been piggybacking on all his ideas, except with one change, which is he never sold anything.

So, you know, all these years go by, decade, let's say, or whatever it was. And the husband dies and he gets the account. And so that's when, you know, the woman transfers the account to him. And that's when he sees this guy has been buying all this stuff that he's bought for her over the years. And then some of these positions have become like monsters, including there was one that was bigger than the entire portfolio he managed for her. was bigger than the entire portfolio he managed for her. And so, he like, it literally hit him. And it was just a lesson that, you know, there's just way too much turnover and he would have been better off had he not been so active. So, he came up with this idea. He called the coffee can portfolio. And the idea of the coffee can is that in the old West, people used to put their

valuables in an empty coffee can and they just kind of hide it and leave it alone and so that's the same idea applying that to portfolio management so you create a portfolio let's say you know 10 to 15 stocks or whatever it is carefully selected and chosen put in your coffee can and you leave it alone and see what happened you know after 10 10 years that's the idea and um you know what it does is does That's the idea. And, you know, what it does is it does a number of things. One, it forces you to really think long-term because you know you're not going to be able to sell something. And then it protects you from your worst instincts, selling when stocks are down or, you know, chasing things that are hot and all of those

sorts of things. So, there's been a number of people who have done sort of real-world experiments with coffee can portfolios and invari, they get some sort of result that Kirby got. There's one stock that becomes a very big winner where the whole overall portfolio outperforms. And there's also usually a couple of big losers in it. So that's the basic idea. Well, I love the concept, right? Because you're forced to try to at least pick companies that you know are going to have some sort of enduring competitive advantage because you can't do anything. You can't change names in and out of the portfolio. And I think a lot of people would be surprised at how well they do. Now, I looked through your notes on this topic on your blog, And you had an idea for a coffee can pick

of Fairfax Financial, which is a Canadian listing here. This is the Canadian Investor Podcast. That's been quite the pick since you wrote that article. I think it was trading at like what? Like 60 cents on the book value there back in, I don't know, four or five years ago. Right. Yeah. So good. Yeah. Well done. I don't know, four or five years ago. Right.

Yeah. So good. Well done. I don't know if you held it, but well done. Thank you. Thank you. No, I didn't actually. And I had a different portfolio too when I worked for the Bonner family office as well. But yeah, that's been a good one. I mean, even better than I would have guessed. So that's kind of the beauty of it. You just, you know, you focus on certain, well, we'll probably get into these, but you get into certain financial metrics. And as long as those are in place, you know, you let it go. And some of these are, you know, winners stay winners.

It tends to happen. You know, you got a stock that has performed well over a long period of time. Probably, you know, the business means something. The business is probably a strong performer as well. So a hundred beggars aside, because statistically, and you point this out, you need to typically be looking at smaller names to have that kind of upside. But there are phenomenal market beating compounding returns to be found with market cap sizes across the board. What are some of the qualitative and quantitative? So I guess we'll start with qualitative and then we'll go to quantitative factors among these kind of mega winners that you found.

Yeah. Well, I actually think the qualitative ones are probably maybe more important, ultimately long-term. So qualitative things would be thinking about competition and competitive advantage. Buffett talks about moats. But the reason you do that is because if you want to hold something for a very long period of time and it's earning high returns on capital, which is one of the quantitative things we'll talk about, it has to be able to do that for a long period of time. And so, that's why you spend a lot of time. I spend a lot of time on that when I'm looking at a new name, sort of what makes it special? Why is it earning these

high returns? And getting a good grip on that. And if you're confident about that, then that's one qualitative metric that passes. Another one I spent a lot of time on is management and sort of the culture around a business. Now, that's kind of a word that's kind of hard to define, but culture being, is it aligned with shareholders' interests? Is it friendly to shareholders? Is it, you know, I often find that the great performers like that have loyal employees, you know, lower turnover than competitors would be a kind of qualitative factor you could consider. So, those are a couple of things that I think are important. And then on the quantitative side, and some of it blends, so, you know, maybe it's not exactly a

number, but I always think about what the return on capital is a business, just in some way. It's not like a specific number, because all these numbers, whether it's return on invested capital, or return on capital employed, or return on equity, they all have pros and cons, right? So that's why you look at all of them. And then taking that and reinvesting it, that's what you really want too, as opposed to you have a great company that has a great ROE, but they're paying it all out in dividends. You don't really want that.

If you're hunting for the big winners, you want them to reinvest that capital as long as possible. And starting small, that's another one that's ideal. Although I think I've said before that if I wrote the book again, I might not emphasize that so much because you could find some really great companies. And if it's a $2 billion market cap or something, it would be a shame to walk away from that or even $10 billion market cap if it checks all these other boxes. So those are some of the ideas that I found. Yeah, because I personally love that range because they're proven assets. There's lots of history behind them.

They might have been public for a while. And nothing wrong with a 50 bagger. Say it turns into 100 billion market cap name. We all walk to the bank with our pockets a little heavier than before. I mean, you get 25% a year for 10 years. That's 10x almost. So that's a very good return. No one's going to worry. No one's going to be disappointed about that.

No. And if they are, then they need their expectations reset. Okay. That's really helpful. And so you kind of hinted at that, those metrics that you like, the qualitative aspect of them are what makes these businesses special in their ability to maintain those said high growth rates and high return on invested capital. And so is there anything else that you mentioned? I know you've talked about margins before. And what I've noticed is that all of these things lend themselves to the qualitative aspects, right? Durably being able to maintain those margins, aspects, right? Durably being able to maintain those margins tell an important story, right?

There's an important story on Visa and MasterCard being able to maintain 60% free cash flow conversion metrics. Those are not numbers that you just find in the wild very often. Right. Yeah. I mean, there's some of these numbers, they can give you clues. So, in the book, I share some research about gross margin being sticky. So, that's one area that if you have a business where you have a high gross margin, there might be a lot of stuff going on between gross margin and net that's kind of noisy, but high gross margins tend to be sticky. That can be a good clue. But I wouldn't emphasize too much any particular metric like that only because the end results that you want is that high return on capital and high reinvestment rate. And there are a lot of ways to do that. Lower margin businesses can do it. I'm sure you and I know- Costco and Walmart have been doing just fine.

They know a great distribution. Yeah, absolutely. Walmart, there's great distribution businesses that don't have very high margins, but because they have other factors that contribute to being high return. I mean, they're very capital light or rapid asset turnover, those kinds of things. So it's not so much like particular ingredients, and then you want to make sure you get that end result. Yeah, I agree. I mean, focusing on a subset of metrics can go down a path of value traps and subpar businesses. However, when they're sustained for a really long time, chances are there's some underlying qualitative aspect that is driving those. Yeah, that's when the magic really happens is when you can find someone, a company that can, as you say, durably put up these numbers year after year after year. As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have

been using Questrade as our online broker for so many years now. Questrade is Canada's number one rated online broker by MoneySense. And with them, you can buy all North American ETFs, not just a few select ones, all commission free so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees. They have an award-winning customer service team with real people that are ready to help if you have questions along the way. As a customer myself, I've been impressed with Questrade's customer service. Whenever I call or email, every support rep is very knowledgeable and they get exactly what I need done quickly. Switch for free today and keep more of your money. Visit questrade.com for details. That is questrade.com.

BlossomTrade.com. Calling all DIY, do-it-yourself investors. Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app. Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time. I am shocked. The engagement is amazing. This is a really vibrant community that they're building.

And people share their portfolios, their trades, their investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked. And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends, and there's other stuff like learning Duolingo style education lessons that are completely free. You can search up Blossom Social in the app store and join the community today. I'm on there. I encourage you go on there and follow me. Search me up. Some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there.

People are just on there talking, sharing their investment ideas and using the analytics tools. So go ahead. Blossom Social in the app store and I'll see you there. I took something from your blog here, quote, Bank of New York Mellon went sideways from 1976 to 1981 amidst a 100X run. Texas industry sideways from 80 to 85 and it's 100X run. American Express, flat from 85 to 92 amidst its 100X run. Berkshire at its peak in 1998 was no higher seven years later, on and on and on. There's countless of these types of examples. Huge winners are facing the same story time and time again. Massive volatility, periods of boring flat returns, extreme pessimism, the iPhone's dead to extreme optimism. The services business is the best ever.

How do you zoom out and balance on what matters amidst these gigantic decade runs? Yeah. Yeah. Well, one thing I'm glad you mentioned the long periods where stocks, where they went nowhere, because in some ways that's, to me, that's a bigger nightmare than when something goes down a lot. At least when something goes down a lot, you got something to do, right? You can buy more of it. But if it's just sitting there and it goes nowhere for a long time, that's tough. I think that's underestimated because it's just hard to hold on to something so long it goes nowhere. Yeah, it's easier said than done when eight years later and you're sitting on this thing and the S&P is up 100%, you know, 100% over the same time. Yes, absolutely. That's it. What I do, I mean, and there's no magic to this. I mean, I wish it were.

I wish it was easier somehow. But, you know, what I really focus on is the business itself. And I try hard to just stay on that and not worry too much about where the price is. And as long as those key metrics that I'm looking at that are important for that business, as long as they continue to go in the right direction, as long as it continues to grow, then ultimately, you know, the stock price is going to react, catch up at some point. So that's really what I focus on. I don't worry too much about the price. I'm focusing on the business. And for every business, you should hone in on what's most

important and then watch that and really make that your focus and screen out a lot of the macro noise and what the market's doing and those sorts of things. They can really be distractions. I think that is a good segue and a self-serving one as well. I've worked with you to bring all of the Woodlock House family capital holdings onto the Stratosphere platform and make sure we had all the KPIs for you. I like to draw on two examples, which are one Netflix stock dropped 35% in one day with their Q2 earnings last year. It lost over 100 billion in market cap. And their revenue is up high single digits in the quarter from the year before. But it was the first time that they had a net churn, a net decline in subscriber ads. And so the market hated that.

Number two, I run two companies. My investor updates don't talk about gap accounting figures. They're exclusively about the KPIs that I think I should be measured on. And so can you speak to the importance of tracking these individual company metrics? Because I think you just hinted with that on how you maintain conviction and hold these things for that long when the price may not have done anything for a decade, but the numbers that you think that you should evaluate the management team on seem to be robust. Yeah. I mean, that's one of the things I like most about Stratisfier platform is those KPIs. So almost every business has something that they report,

but it's not part of the financial, whatever, disclosures that everybody else reports on. So, it's not earnings per share or sales, something else. So, I can think of an example like Old Dominion Freight Lines is one that's got a lot of different KPIs actually. There's an operating ratio they report all the time there's a measure of efficiency. Then there's things like revenue per hundred weight. There's a lot of metrics like this that they report. And so, sometimes like I think it was last quarter to quarter before where they had kind of looked like weak headline numbers in terms of revenue and earnings per share. But if you looked at those underlying KPIs, it was like the second best quarter the company has ever had.

It was facing tough comps because the best quarter they ever had was the one exactly a year ago. Yeah. And the market sold off pretty hard. No good deed goes unpunished, of course. That's exactly right. But if you looked at those numbers, you had nothing to worry about. I mean, even this year, there's a decent chance that this year

might be kind of a flat year or slightly down. But if you look at those KPIs, it'll be the second best in company history, second only to last year. So that kind of puts it in perspective. You know, that's why I like, too, the KPIs, because then you can easily sort of track them. And another one that easily comes to mind is Constellation Software and all the sister spins. They always report things like the organic growth. You want to see how that breaks down. And it's nice to be able to compare it quarter to quarter

and get some perspective on that, how that's changing and evolving. Number of executions, capital deployment, that kind of stuff. Yeah, exactly, exactly. So those are two examples that come readily to mind. I think you tweeted out – That's a good feature, I think, it might have been Old Dominion. I think you tweeted about Copart. And you're like, look, this is, based on the metrics that I think matter, this business is doing phenomenal. Does this look like a security that should be trading down 30%?

Yeah. And it helps. It's why we started doing it because it really helps you remain focused and keep your conviction in your investment thesis. And calm. And calm. In your investment thesis that you set out with, because years go by, investment thesis that you set out with because years go by, price drives narrative. And then all of a sudden, if you didn't focus on what you originally had in your investment thesis, you can head for the exit sign or not have that ideal portfolio turnover of zero. Yeah. And I also think it's important too to see how those change over time. That's the other thing I really like about Stratosphere.

You look at this. One thing to note with the KPI is this quarter or whatever it was or last year, but then to be able to put it out on a graph and see it over the last, you know, 15, 16 quarters, because that gives you a sense too, that these businesses, you know, they're organic living things, sort of for lack of a better word. There's going to be some changes, right? Nobody's, even your weight doesn't stay right here every second. It fluctuates a little. It's the same

thing with businesses. There's a little bit of, there's things they wiggle on and it's okay. Yeah. We have experimented with nothing officially, but it's showing weirdly promising results. So Adrian, who's my co-founder and runs our data team, he's been messing around with backtesting because we track segment changes of businesses that rapidly are constantly changing their business segments, have a tendency to rapidly underperform.

And if you look at Berkshire, we have like 30 years of the exact same segment reporting. Wow. Versus Disney, the numbers change like every six quarters and they're repositioned into where things fit in constantly.

And I get the business has changed. They have this new streaming business, whatever. But instead of adding new segments, they completely swap them out. A lot of changes at the executive level. And it's easy to pull on Disney right now. It's obviously a world-beating company. But the stock has done horrendously since they did all these changes.

And it's really helpful to look at those things. And the management says one thing, and then are they doing that other thing or are they now on this new uh new reporting schedule new scheme i think it's quite fascinating to look yeah and if they're a repeat offender that's really interesting you know if it's okay like you say every once in a while something does happen and you have a change but if you're repeatedly doing it and you know you look over time the segments have changed that's really interesting and it makes sense because you would think companies that do that are companies that are struggling to find something. So, I think that makes sense.

All right. Growth, growth, growth is the name of my next question here. It's been proven time again, revenue growth is the number one factor for return decomposition over time, all else equal. But paying a reasonable multiple certainly improves performance. How do you think about balancing this balancing act that is the great solve of equity investing? How do you think about that internally when you're making decisions? Yeah. I mean, it's all about the estimated return. So to start, I mean, you always calibrate your multiple to the growth rate. And another way of looking at that is to break that down

and kind of return on invested capital and reinvestment rate. A company that's earning high returns and reinvesting everything is going to be worth a lot more in the market than one that isn't. One that requires an awful lot of capital and doesn't earn those high returns is going to be worth a lot less. And so, it's having some view of what that will look like over the next five or 10 years and then putting a multiple on those cash flows at that point and seeing what your IRR is to present. So, I say that and make it sound like it's more of a math problem, but of course it's difficult because you have to make some estimates and some things you're less sure about than others.

So sometimes you will trade off something that seems like it will have a lower return, but you're a lot more sure about it than something that's got a lot more competition. Yes, it's a lot higher growth, higher returns, but you have no confidence that it's going to be able to maintain that for five or 10 years. So there's always some trading up and down the ladder. And then some of it's personal preference. I mean, at some multiple. And in theory, I say I lay it out like that because in theory, it's a math problem. So if you found something that was trading 100 times earnings could still be, you know, a great idea based on the growth rates and returns and all that.

But there is an area there where you get kind of uncomfortable because, you know, your sort of window for execution sort of tightens up and yeah, mistakes are usually punished. So, you know, it's the great, like you say, it's the great, it's one of the great, I don't know what you should call it, the great solve, great mystery for equity investing is how you balance that. Ideally, you want to pay as low multiple as you can for as high as quality companies as you can get. But it's easier said than done. It certainly is. And I think that

myself, many of the listeners of this podcast who tune in every week will attest to that, that they start their journey with value traps, high yield, low growth names and- Stuff that's below book. Stuff that's well below book. And of course, when they work out, you get the twin engines, right? Then it really works. But if you were going to invest in a private company, you would do excessive due diligence before you bought your neighbor's auto garage. You would figure out, can the business be bigger now in 10 years than it is now relative to what I'm paying? Is it going to be a high quality business? Is it going to be a new auto shop that opens next door? All these kinds of questions.

That's right. And then people gamble their whole life savings in the equity markets without asking those same basic questions. So I find it one of the strangest phenomenons of human behavior. It is. I think partially that is because it's so easy to buy and sell in the equity market. There's no friction. Push your button and you're in. Yeah. Push your button, you're in.

Push your button, you're out. And that's it. And versus, say, buying real estate where it's kind of a hassle, right? You got to go process and you got to settle. And so, I think people would be more thoughtful about it if they couldn't get in and out so easily. We need to do like, I need to start like a brokerage trading platform where you have to like solve some intensely complex riddle before you're able to log in. You have to like do, you know, you have to do a calm test. You have to do like 10 to 15 minutes of meditation and then solve a very complex riddle.

Yeah. Yeah. There's a lot of interesting little rules like that you can make for yourself. I know somebody like, when they make a decision on something, they always like to wait at least two weeks before they enact it and see if they still think that way. Very smart. There's a lot of little things like that, just to, like you say, try to get to that area where you're calm and making the best decision. Absolutely. As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have been using Questrade as our online broker for so many years now. Questrade is Canada's

number one rated online broker by MoneySense. And with them, you can buy all North American ETFs, not just a few select ones, all commission-free, so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees. They have an award-winning customer service team with real people that are ready to help if you have questions along the way. As a customer myself, I've been impressed with Questrade's customer service. Whenever I call or email, every support rep is very knowledgeable and they get exactly what I need done quickly. Switch for free today and keep more of your money. Visit questrade.com for details. That is questrade.com. Calling all DIY do-it-yourself investors. Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app. Every time I go on

there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked. And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends, and there's other stuff like learning Duolingo style education lessons that are completely free. You can search up Blossom Social in the app store and join the community today. I'm on there. I encourage you go on there and follow me, search me up. Some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. People are just on there talking,

sharing their investment ideas and using the analytics tools. So go ahead, blossom social in the app store and I'll see you there. What about serial acquirers do you find so attractive? Because I'm very drawn to them. My portfolio, I don't know if you know this, but it's roughly 50-ish, 55% in Constellation and the spinoffs. It's one of those good problems to have, the old investing paradox. I don't trim winners, so it keeps maintaining that position. What do you find about serial acquirers so attractive with ones you own and just conceptually? Yeah. I think for people like us, we're so focused on capital allocation. I think that's one appeal because the good serial acquirers are all about that. Capital allocation is the primary thing they think about. That's their business operation.

taking capital, reinvesting, and doing it again and again. So I like that aspect of it. They think about it like that way, and they're aligned with us as investors in that way. That's what we want. Good returns, good reinvestments. That's the big one. I think also there's something nice about owning businesses like that that are so hard to kill. Because most of these serial acquirers have so many different businesses. It's not like, you know,

one of those businesses would go to zero, for example, constellation, you never know it. I mean, so what, you know, so they're really resilient that way. The good ones, again, there's always examples we could point to serial acquirers where they sort of didn't quite get the model, right. There's ones that get too much leverage or it's all kinds of pitfalls, but generally it's all kinds of pitfalls, but generally it's a very resilient model,

not very economically sensitive, focused on capital allocation. Those are, those are great things right there. Separation from a lot of other businesses. And if you pick the right jockey time and time again, we've seen some of these monster winners with serial acquirers I think Mark Leonard calls them high performing conglomerates

HPCs he points to Berkshire Roper among the long list and you're right there's a whole bunch of them in Sweden Sweden has a ton if you look up Lifco and Lagerkrantz and Adtech and Indutrade,

I mean, monster winners over a period of time. One under the radar one, I don't know if you've looked at, but it's a Canadian engineering roll-up called WSP. I've owned the stock for six or seven years now. They buy roughly 30 engineering firms around the world a year, and they're the largest civil firm now in aggregate in the world. It's 25 billion in market cap on the TSX, yet you don't hear a peep about them, and it's amazing. I should stop talking about them on the podcast. But another one to look at that's kind of under the radar.

All right. So when it comes to picking the right j kind of under the radar. All right. So when it comes to picking the right jockey and picking the right management team, I look at your writings, I look at your longs, which is a wonderful roster of management teams and owner operators as well. It resembles the sidecar investing strategy, which I'm personally a big fan of. Can you explain why this is important to you, maybe on the owner-operator thing? And then to give an overview of how you even evaluate them. You mentioned before culture, but in actual process, are you reading their writings? Are you listening to the calls? I'm curious. Like, are you reading their writings? Are you listening to the calls? I'm curious. Yeah. I mean, so why is it important? Yeah, because I didn't always used to be so focused on an opera. So it's something that came over time and experience. And, you know, I would see differences of behavior. And the idea of investing with people who had skin in the game really had great intuitive appeal. And there's a couple of books I read by Martin Sosnoff. He really made an eloquent case for the owner operators. One book was called

Humble on Wall Street and the other one's called Silent Investor, Silent Loser. They're both out of print. And he's not really an investor like us in a lot of ways, but on this particular issue, he's really good. So there's that. And then I started to come across research that showed the outperformance of companies where the CEO owns 10% of the stock, outperformance of companies where they're founder-led, outperformance of companies where there's a family that owns a certain percentage. So you start to put these things together. And sometimes I think that's really what investing comes down to is accumulating these little edges. And so if you just made that one filter change, you have this seeming positive

flow there behind you, increasing the odds of success. So that was all pieced together over time. I think that's why it became important. And finding them is hard. I mean, it's, yes, like reading their letters, sometimes, you know, they'll stand out because they write a letter that covers all the things you would want to know as a business owner. I mean, Mark Leonard's letter is obviously famous. Warren Buffett's letters, these are, they write their own letters, clearly. letters obviously famous. Warren Buffett's letters, they write their own letters clearly. And they're very sort of candid and forthright about business in a way that you pick up and you report for a lot of companies and it's not clear that they wrote them necessarily. It's more of a marketing piece. Very corporate talk versus the owner telling you about his business or his or her

business. That's it. That's it. I mean, that's it in a nutshell. You hit it right there. What do you really want is you want an owner. It's talking about their business and the closest,

closest you can get to that. Probably got somebody. That's a good sign. It's a good sign, but it's not never easy. I mean, anytime you can, yeah,

listen to them speak. Sometimes that's happened too, where you hear someone talking like, wow, and he's talking like he's an owner and he's, and that's, that's a clue. But that's, that's hard because you can't screen for it so easily. Right. So, it's something you just, a lot of reading and talking and finding out who the most respected people are in space and then researching from there. Yeah. It's, it's super difficult to do, do, and there's no kind of guide or right way

to do it, but hop on a call, read a letter. I mean, there's no kind of like super green flags, like, oh, this is excellent. But red flags stick out like sore thumbs and you can't unsee them, right? Like just avoid those, right? So you're just kind of doing a lot of gut check and incentives, incentives, incentives, right? Like that's the whole point of the owner operator thing. The incentive structure, if the management team owns a lot of stock,

they're going to act like owners instead of a corporate executive that's just trying to make their bonus, right? Like it's an entirely different incentive structure. Sure. And it's one people can totally understand, you know, if you're, you own a house versus rent it, there's that old saying, no one washes a rental, you know, when it comes to cars, uh, it's a lot of stuff. We, we know that that's how it is. And so it's no different in business. Chris, I really appreciate you taking the time. Where can people find your work, find you online and so forth? Sure. Well, I mean, Google Woodlock House,

I'll come right up there and you can find my blog and my books. And then I'm also on Twitter. Well, it's now called X. Yeah, you're on X. So I'm on X and the handle there's chris w m-a-y-e-r so you can find me there too i haven't read your other books because i'm on your website right now and i didn't know you had any other books so uh now i have some more material the world right the world right side up from brazilian farmlands to colombian gold fields from From Brazilian Farmlands to Colombian Goldfields, From Chinese Shopping Malls to Indian Hotels, From South African Wine Country to the Boom Bust of Dubai. This looks – Hidden Investment Opportunities. This looks right up my alley. I'm a big traveler and investor.

Well, that's it. So, all these books, like, have – they all cover, like cover different phases of my career. So that worldwide setup was, yeah, I did a whole bunch of international travel and just kicking around all kinds of markets. And it was before 100 Baggers. So I thought about things differently then and a lot differently, actually. But, yeah, that was a lot of fun to write that book. And I did a whole bunch of travel after that.

And I thought about doing a sequel, but I never got around to it. I was a big fan of Anthony Bourdain too for a long time. And he was sort of my inspiration, the way he would just get out and drop in a place. Right. Boots on the ground. Boots on the ground.

That was it. I love that. And maybe it speaks to, when I look at your holdings, I mean, it's, it's, you're an American investor. Uh, you know, you, you manage us funds, but you have a lot of, uh, international exposure to the, a lot of these kind of hidden gems that don't trade on, uh, the nice year, the NASDAQ. And I think that that's pretty interesting. Yeah, all over in Poland and Sweden. So that's always been, I've always been interested

just sort of in the bigger world. And that comes out in my investing taste too. And I think you could probably find growth at a more reasonable price in a lot of these markets as well. Yeah, sometimes you can. Sometimes you can. Yep.

Love it. Well, appreciate you taking the time, Chris. If you guys haven't read A Hundred Baggers, we'll link it in the show notes. It's available on Amazon, right? Yes. Yeah. A Hundred Baggers, stocks that return 100 to one and how to find them. And you know what, Chris, when I first saw a lot of people talking about the book on Twitter, I was like, what in the bull market, what in the hype mania book is this? And I read it and I loved it because it's very long-term compounding thinking about companies that sustain wonderful competitive advantages. And so I was right. It's one of those things about book publishing. You can't call it high quality

compounders. No one will read that. No one will read it. Let's talk about a stock that returns 100 to 1. Oh, now we're talking. Now we're interested. Now we are interested. The same way with the podcast. We'll take one little tidbit of it and

blow it up and have it click-worthy because if you're discussing macro again, it's not that exciting. So it's all showbiz, baby. Well, thank you so much. Go check out Chris's books and his website. That is woodlockhousefamilycapital.com. The Canadian Investor Podcast should not be taken as investment or financial advice. Brayden and Simone may own securities or assets mentioned on this podcast. Always make sure to do your own research and due diligence before making investment or financial decisions.