We Study Billionaires - The Investor’s Podcast Network - TIP592: Outperforming the Market since 1998 w/ Andrew Brenton

Episode Date: December 8, 2023

On today’s episode, Clay is joined by Andrew Brenton. Andrew Brenton is the CEO and a co-founder of Turtle Creek. Since it’s inception in 1998, Turtle Creek has acheived an average annual return of 20% versus just 7% for the market. $10,000 invested into their fund at inception would have grown to over $885,000 as of September 30, 2023, and had that money been invested in the market, it would have been worth just under $52,000. IN THIS EPISODE YOU’LL LEARN: 00:00 - Intro 02:21 - How Andrew’s experience in private markets prepared him to take on public markets. 07:23 - Turtle Creek’s distinguished approach to value investing. 14:25 - What makes for a great, unique business for Andrew to get interested in. 18:06 - Why Turtle Creek chose to focus on mid-caps. 21:07 - How Turtle Creek avoids losing money on almost every investment they make. 23:37 - Why overpaying is the biggest risk for Andrew. 27:31 - How Turtle Creek improves upon an approach of simply buying and holding great businesses. 35:38 - An overview of Premium Brands Holdings. 36:56 - An investment case study of Automation Tooling Systems. 44:25 - How Andrew determined that 25-30 companies in the portfolio is the right amount. 56:53 - What led Turtle Creek to set up a synthetic private equity fund. 01:02:02 - The story of Turtle Creek being the largest shareholder of Home Capital Group prior to Berkshire Hathaway taking a major stake. 01:07:20 - How continuous improvement has played a role in Turtle Creek’s success. 01:13:01 - What’s next for Turtle Creek in the next 25 years. Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences. BOOKS AND RESOURCES Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, and the other community members. Check out Turtle Creek Asset Management. Learn more about the Berkshire Summit by clicking here or emailing Clay at [e-mail]. Related Episode:TIP585: Concentrated Value Investing w/ Shree Viswanathan or watch the video. Check out all the books mentioned and discussed in our podcast episodes here. NEW TO THE SHOW? Check out our We Study Billionaires Starter Packs. Browse through all our episodes (complete with transcripts) here. Try our tool for picking stock winners and managing our portfolios: TIP Finance Tool. Enjoy exclusive perks from our favorite Apps and Services. Stay up-to-date on financial markets and investing strategies through our daily newsletter, We Study Markets. Learn how to better start, manage, and grow your business with the best business podcasts. SPONSORS Support our free podcast by supporting our sponsors: River AlphaSense Wise American Express Business Gold Card Shopify Toyota Ka’Chava Glengoyne Whisky Babbel Alto Linkedin Marketing Solutions Noble Gold Investments Vanta Efani Monetary Metals Salesforce Notion AI HELP US OUT! Help us reach new listeners by leaving us a rating and review on Apple Podcasts! It takes less than 30 seconds, and really helps our show grow, which allows us to bring on even better guests for you all! Thank you – we really appreciate it! Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm

You're listening to TIP. The listeners are in for a treat today as I'm joined by Andrew Brenton. Andrew is the CEO and co-founder of Turtle Creek Asset Management. Andrew is quite a special guest on the podcast as him and his team have practically mastered the art of value investing. Turtle Creek has had an extraordinary investment track record. Since Turtle Creek's inception in 1998, they've achieved an average annual return of 20% versus just 7% for the overall market. Just to show you how extraordinary this sort of track record is,

had you invested $10,000 into their fund at Inception, it would have grown to $885,000 as of Q3, 2023. And had that money been invested in the market, it would have been worth just under $52,000. A number of firms are able to achieve high returns over very short time periods, but very few are able to replicate this level of success that Turtle Creek has had for decades. During this chat, we cover how Andrew's experience in private markets prepared him to take on the public markets, Turtle Creek's distinguished approach to value investing, what makes for a great unique business for Andrew to get interested in, why Turtle Creek chose to focus in the mid-cap space, how Turtle Creek improves upon an approach of simply buying and holding great

businesses, an investment case study of automation tooling systems, the story of Turtle Creek being the largest shareholder of Home Capital Group prior to Warren Buffett and Berkshire Hathaway taking a major stake in the business and so much more. This was one of my favorite interviews today and I know you certainly aren't going to want to miss out on this episode. With that, I bring you today's chat with Andrew Brenton. You are listening to The Investors Podcast, where we study the financial markets and read the books that influence self-made billionaires the most. We keep you informed and prepared for the unexpected. All righty, welcome to the Investors Podcast. I'm your host, Clay Fink. Today, I really couldn't be

more excited as I welcome Andrew Brinson to the show. Andrew, it's such a pleasure and honor to be chatting with you today. Clay, really excited to be here today. So for those who are familiar with Andrew, he's the co-founder and CEO of Turtle Creek Asset Management, which is a Toronto-based firm that has put up these stellar returns. Since late 1998, they've delivered an average annual return of 20% relative to both the benchmark and the overall market returning just 7%. So, Andrew, we're going to be diving into how you did this, but I'd like to start with your background to help paint a picture for how you developed this skill set for investing in the public markets. You initially worked as an M&A advisor, and then you eventually set up a private

equity fund at a Canadian bank. So talk to us about your story of getting into and working in private equity and how that helps shape you to eventually start Turtle Creek in the late 90s. Sure, happy to do that, Clay. I mean, when I was in business school here in Canada, I had concluded that I wanted investing was what I wanted to do, but especially back then, because that was a long time ago, there weren't a lot of what I'd call, you know, well, there weren't a lot jobs like joining a firm like Turtle Creek at the time. Plus, I needed to make money. And so I turned and focused on joining one of the investment banks and as a mergers and acquisition specialist or advisor. Because I thought, what better way to learn about what companies pay for

other companies or divisions than to work in that world day one as a young kid fresh out of school. And it really was great schooling, if you will, over that time. You know, it was then that I noticed that as I got to work with a client, or if I did even just a little bit of work with a company, and then we would go in often to meet with some of their big investors and, you know, talking about maybe they were looking at doing a deal or they want to lock up. I realized the accounts really didn't know the company very well. I mean, they were a shareholder. They owned it. But They didn't know it as well as by then I did, given the work I had done. So it put pay to my view that, you know, the efficient market thesis, if you think back

to the 1980s when I went to business school, I think that was the height of the efficient market theory. And I came through that process thinking, oh, man, markets are far from perfect. They're far from efficient. There are a lot of inefficiencies. And so that thought was in my head, even in that early period of my career. And in fact, my two co-founding partners at Turtle Creek were at the same firm. They were younger than me and they were both in M&A.

And so if you think of the next phase of my, I guess our career was having the opportunity or being asked to look at setting up a separate division subsidiary inside the bank. We were at the large Canadian, one of the large Canadian banks to be a private equity investor, i.e. control investments, typically on our own. And so we took that knowledge from acting as an advisor and now had to be a principal. We actually had to write checks and sit on boards and control the company. And I think through that period, we really developed an appreciation of the complexity of corporations. And that's one of the things I think we bring to the public market. But as we were doing that part of our career investing. And we had good returns. It's not like we, that didn't work

out and we had to go try something else. I kept seeing what I thought were better run companies at trading much more attractive valuations in the public market. And I thought, I don't want to spend my time sitting on boards. I'd rather instead spend my time sorting through the public market for us first in Canada in the first decade. And in the last 15 years now in the U.S. And if we ever finish with the U.S., we'll look to other parts of the world like Europe, perhaps, to identify the type of company that we wanted to potentially invest in. And we're not activists. We're just engaged investors. And so the journey to me is logical in that, if you think about it, it's first advising, learning, watching good and bad companies, frankly,

you know, making bad acquisitions or great acquisitions, and then taking that experience and applying it to being a control shareholder as a private equity investor, and then taking that combined experience to now in the last 25 years being a minority investor, but in an engaged way with the public companies that we own. One of the fascinating things I discovered with you was that It seems that so much of what you've learned is through this experience in M&A and private equity, rather than studying Warren Buffett's letters or whatnot. You had almost joked in our previous conversation that you've never been to a Berkshire meeting. Would you say that's a fair characterization where, you know, this prior experience was really

critical to making that step to starting Turtle Creek? No, I think that's true. Well, it is for sure true that I've never been to Omaha. And we developed our investment approach, which is, you know, I think I've heard this term from value investors saying, there's only one way to invest. And so it never occurred to me that there might be other ways to invest. In other words, if you go back to the steps in our career, I think sometimes I'll describe it as there's the upstairs market and there's the downstairs market.

And the upstairs market is, what's a company worth? And that is how you live in the world of mergers and acquisitions. And then when you're in private equity, it's what is a company worth? Not where are the shares trading every day? As Turtle Creek pivoted to the public market, we continue to marvel at what people are doing out there. It is extraordinary. And it might work.

I mean, there are studies that show momentum perpetuates. That might be true. I've never worried about that. Our approach is just fundamental investing. And there is no other way to invest. It's the present value of cash flows. The first time I ever spoke for a prof asked me to go and speak to his investment class, this is a long time ago.

And I thought, what am I going to talk about? So I talked about complexity, how companies are really complicated. And you have to accept that. And you have to be humble about it. But then I made the comment. And as I said it, I thought, he's never going to invite me back. I said, I feel like everything I've learned about investing in business school was in my capital budgeting class, you know, cash in, cash out. It's all about cash in cash out. And so it wasn't

until years into Turtle Creek as I would meet other investors outside because we started on a very tight group. And then as we've grown, we now have investors from around the world. And people would start saying, you're a value investor. And I'd heard the turn. but I'd never read any of the value investing material. And I have to admit at that time, I did read one of the better biographies of Buffett. And when I read it, I read it over the holidays one year. And I thought, gosh, I wish I'd read this 10, 15 years ago, because would it have changed? And then I thought, no, in my view, you have to live it. And so the path that we've taken has made us the investors that we are. And as I say, it was only later as I go back,

it's just confirmatory that, oh, look, there are other people who think the same way that we do. It's not like we read other people's approach and said, let's apply that to us. So, Andrew, let's transition here to talk about what you call your investing approach, which is a different kind of value investing. You have this four-step approach that you've developed over the years. And then I'd like to dive in a little bit deeper. into each one. The first step is finding the right company. The second is determining the valuation and understanding what the company's intrinsic value is. Third is portfolio construction and the sizing of your positions. And then fourth is the continuous optimization and repeating that whole process.

So how about you talk about how you came to develop this four step approach? And maybe you could talk about what's been maybe the leading driver in this outperformance your fund has had. What step you believe, maybe is more contrarian or has been a big driver for you? Sure. I mean, the first step really is the application of our prior parts of our career, right? If you think about over the years prior to setting up Turtle Creek, I've seen my partners and I have seen hundreds and hundreds of companies, again, first as advisors being on the inside, working with management, and then in our phase of private equity, frankly, meeting thousands of opportunities and winnowing that down to, you know, 100 that might be

interesting enough. And then we ended up investing in around 15 companies back in the 1990s. So we have a lot of scar tissue. We have a lot of experience of saying, that's a good company and that's not. And it's never black, 100% black and white. And then you might think you found a good company. And then as time passes, you realize, it's not. as good as we thought. And so in essence, we've brought that background to meeting with public companies. Unfortunately, there is no button on Bloomberg that you can hit and say, give me the highly intelligent owner mentality, honest, shareholder focused for the long-term companies. You have to find them meeting them one by one. And that's why I mentioned earlier in the first decade,

when you look at us, it's correct to think of us as overwhelmingly a Canadian equity fund. And then as we, 15 years ago, said, let's now do the same thing in the U.S., we found, not surprisingly, equally remarkable companies and a lot of them in the U.S., and now our main fund is over two-thirds U.S., and therefore less than one-third Canadians. So it's just trying to find those highly intelligent organizations. By the way, they don't always stay highly intelligent. If you think of over 25 years, we've watched some companies lose their edge, people retire. And frankly, on the reverse, we've seen companies we didn't think were great 20 years ago

become really fantastic companies with governance and board renewal and different management. So that is a first step when we talk about a different. kind of value investing. I'd say the only thing that might be distinguishing in that first step is versus, you know, call it a standard or traditional value investor, is that I'm really drawn to unique companies, one-of-a-kind companies, because I look at the public market and think, what's more likely to get mispriced in both directions? You know, a great company, so assume they're all at least above average and a lot of them that we follow are great companies, that a company that has five various comps, as they say, comparable companies, or a company where there's

really nothing else like it in the public market. And so in that stuff, we're really drawn to one-of-a-kind unique companies. And because our view is, if you're going to do all that work, and we do do a lot of work over the years, wouldn't it be great to own companies that get more mispriced in both directions? And that's really been our experience. And I think to a small extent that as one of the sources of our outperformance over time. Diving more into finding the right company, you've once stated that sometimes it's just blindingly obvious that a company is remarkable when you meet them.

So other than looking for a unique business that doesn't have easy comps or comparables when looking at the business, looking at the valuation, what else is it that makes for the right company for you? You know, there isn't a checklist. Sometimes I think of it as, well, we're just waiting for them to say something stupid. And when they do, then we realize it's not a great company. There are lots of companies that are great at telling their story and pitching their stories.

So it's more ongoing conversations. You know, it reminds me of recently with one of our longer time holdings where the CEO, they're now one of their third CEO, which has transitioned in a very orderly way over 20 plus years. he is kind of promotional may not be the right term, but in the quarterly calls and things. He's somewhat just standard in the way he talks. But when you then get him on a one-on-one, when you speak to him, when you go and visit them, and you start drilling down and asking questions about the company and this part and how do you incent your salespeople, just in a sense, the cream rises to the top.

So it's just asking questions, being curious, and you just know it over time. Or, you know, I shouldn't say know it because we're constantly tweaking our views. We, you know, we're elevating our views on some of our companies, but we're also decreasing our views on other of our companies. And sometimes our view decreases to the point where we, as we call it, voted off the island. So if you think about the history of our firm in the main fund, you know, I always preface of saying we've only, but we've only owned 115 companies over 25 years and we own 30 today. So if you think about that, there are, what's the math? There are 85 companies that we own at some point that we don't own today.

And what I find interesting is if you put those companies into different three buckets, as I think about it, they're almost equal buckets. So one bucket, there are companies that have been taken private. Somebody's bought them. So you lose them. They may have been great, but you can't own them anymore because they're owned by somebody else. Another third are companies that we still think are great. We're following them closely.

They're just not as cheap as the ones we own in the flagship fund today. And then the other third is that bucket of companies that have lost their edge, and it's not surprising over 25 years, you would expect some companies to not be as good as they were 20 years ago. And I always say, we're trying to find generationally great companies. And so all you can do is figure out of that, this management team, this board, this culture is something that is suited for us today. The expectation that that can remain. or be retained for the next generation of management, it might happen, and we've seen it happen, but that is a really tough, tough thing to bank on.

So like I said, instead we just, I just think of it as we're looking for a generationally great companies, and we can find a company that at least for the next 10, 20 years is aligned with their shareholders and doing impressive things and out competing the competition. That's as much as anyone can ask for. And I'm also curious, I believe you've almost always focused on businesses with market caps between two and 25 billion. I think sometimes you sort of venture outside that. But over the 24, 25 year period, your fund's been around. It seems like you've stuck with that threshold. Is there anything about that specifically that attracts you? Or what is it about that more mid-cap space?

Yeah, I mean, part of it is, if you think about our approach, we need access to. to management. We need to be able to reach out to them. We need to be able to have a call with them after the quarter. We need to be able to go to their investor day. And as I mentioned, we're having dinner with one of our companies tonight, a U.S. company that is in Toronto, those just a private dinner with them. Those are valuable things for us, just that interaction of just picking up, understanding how they think. And so the market cap, in a sense, falls out of the size of, of Turtle Creek. You know, think about when COVID hit, we were able to get on the phone with all of our companies within the first week or two. And that was very helpful for us to understand

not only what they were doing, but the implications for the other companies that we own. And then I would also say our experience in the smaller cap space, I'm not sure that investors get compensated for the risk they're taking. So when we look at that mid-cap space, when you You've got a $10 or $20 billion market cap company. Market cap meaning they have earnings that justify that market cap. I don't mean earlier stage or some of the tech companies. So well-built out companies that are trading at attractive valuations, they've gotten past a lot of that earlier company risk.

And at least in our experience, they're very attractively valued at times. Not all of them. A lot of companies we follow today are trading above our view of their intrinsic value, but the ones that we own today are trading that significant, I'd say remarkable discounts to their intrinsic value. And as we grow our AUM over time and as we've interact with larger companies, we have found no correlation between, call it market cap and market efficiency. I think they're all inefficient.

They're all mispriced at times. But you're right. And you think about that 20 to $25 billion market cap space in North America, that's a big space. That's a lot of companies. And so we're, we are pretty busy, as I mentioned earlier, still working a way through the scale and size of the U.S. market is substantial. We've still got a lot of work to do to call it if there is any finish to continue to at least get close to finishing our work of identifying and flagging the kind of companies in the U.S.

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As I was prepping for this interview, one of the pieces that really stood out to me, you mentioned 85 names that you've owned, that you don't own anymore. And there was only a few of them over your fund's lifetime that you've actually ended up losing money on. And it was a pretty negligible amount that you ended up losing. So it seems that you've really honed in on figuring out what is a quality business. And then also the valuation, which we'll be getting to, is also an important point of that where you're only purchasing those companies at attractive evaluations. And I think that was just quite amazing how you've owned over 100 names and then only a few of them have ended up, you know, not contributing positively to the performance.

Yeah. And then the 85 happens to line up with a different 85 number. But it's true. That's shortening the time period in saying not in the last 25 years since we started, but just looking at sense of credit crisis and saying in that period, we've owned 87 or 85 companies. And then, of course, 30 today. And you're right. Jumped out at me and we were asked to do this work by some large U.S. groups, investors. Where did the returns come from? And because I try to explain to people, we don't hit home runs. We're the group that we're trying to hit singles, we're sacrifice flies, we're bunting to get on, we'll even let ourselves get hit by a pitch to get on base. we're trying to manufacture runs.

And when we get to the last steps of our investment process, I think that will make it clear. But I was frankly surprised looking back to see that there were only two investments that we lost money on. And the aggregate amount was really quite small. In other words, it had an immaterial impact. If we hadn't had them, you almost wouldn't have noticed because it just didn't have an impact on the aggregate return. So I think, you know, as you hear, the first rule of investment is don't lose money. And the second rule is the same as the first. So, yeah, I think that's part of the approach.

But it's not like we're not trying to be timid. And I'll talk about that in the second step when we talk about our valuation process. So it's just the reality that we have. And it isn't like we're afraid of losing money. We fully expect to in some investments to make. the investment and not get it right and to lose money. You've said that valuation is actually the biggest risk in your investment process. I'd love for you to dive in and talk about, you know, what makes, you know, successful process

of determining the intrinsic value. You've said, you know, it's all about the cash flows and the present value of those cash flows. But I'm curious maybe what sort of internal rate of return you need to target, what sort of discount to the intrinsic value you need, you need to target to make sure you're not falling for this biggest risk of valuation risk. Yeah, I mean, our approach, that second step where we, so we found a company, we think it's our kind of company, then the problem is you don't know if it's cheap or not. In our view, you can't look at a PE multiple. There are so many accounting irregularities, whether it's IFRS or US GAAP.

And so you need to do a lot of work. You need to build a financial model because it also forces you to, to explicitly think about all the assumptions. And it creates a lot of back and forth in dialogue with management of the company over time. And one of the key differentiators, back to that idea of a different kind of value investing, in that process, and this is one of the things that I'm frankly constantly doing with the people on the investment team is trying to make sure they don't, they're not conservative. Last year, a term crept into the investment team was something like, you know, underwrite.

Well, I'm not sure I'm willing to underwrite that assumption. And I say, we're not an insurance company. We're trying to get it right. We are trying to, if a company has big organic growth and we believe they have big organic growth, then I want to see that in the forecast. I want it to be balanced. I want to look at the end of the year and look back and say, that's okay. Some of our forecast turned out to be.

may be a bit too high. We've taken our long-term numbers down. That's okay. If I saw that we never did that, then I'd conclude we're being too conservative because one of the risks, yes, there's valuation risk in terms of paying too high a price for an investment and owning a great company and then looking at it 10 years later and saying, wow, they've really done well. And the share price is the same price because of the price you paid at the beginning. But there's equally a risk that you didn't recognize and embrace the organic growth or the inorganic growth, the ability to create value through acquisitions. We own a lot of what I call platform companies, not roll-ups, but platform companies. And if you're not willing to consider that in the forecast, you're going to sell your

shares too early. So I think at least we try to do a good job of being balanced. And recognize that some companies have a remarkable opportunity set for many years to come. And if you don't see that or aren't willing to acknowledge it in your financial model, in your forecast, you're going to look at it and say, well, it's a great company, but it's really expensive and I don't want to own it. And many times, we'll look at companies. And when we factor in that long-term growth and the inorganic growth, the platform companies, we'll conclude that a stock is cheap when other investors will say it's really expensive

because it's trading at 25 times earnings or 30 times earnings. And we'll say, yeah, but they're acquisitive. And there's a lot of amortization in the earnings number. So you have to take that out because that's a non-cash number. And then they have a lot of growth, whether it's through acquisitions or through organic growth. And the work that we do causes us to conclude, it's actually. pretty cheap and we want to own it. So I think it's that process of trying to be balanced deals with

that valuation risk, i.e. just paying too much for a really good company. You just mentioned factoring in the long-term growth of a business. And it reminds me of another comment you've made where you stated, you don't believe in economic modes. And I think this points a bit to being careful when forecasting higher growth rates into the future because eventually all businesses hit their stage of disruption and decline. So when you find a great business, how do you think about forecasting out above average growth rates and doing so in determining, you know, an accurate picture of the intrinsic value? Because it seems like you've really nailed down this process of intrinsic value. You know, what is the business worth? And, you know, you have to make some sort of forecast

maybe even more than five years out from now into what the business is going to be able to do in terms of the cash flow generation. Well, it's interesting, right? Because if you think about what an investor does, if they're even just sticking the price earnings multiple on the current earnings, they are making a long-term forecast. There are a bunch of implicit assumptions, whether it's simply one over K minus G, right, the cost of capital minus the growth rate. And what we're doing is simply saying, well, I think we can come to a better long-term

view if we force ourselves to explicitly make assumptions next year and in five years and in 10 years and in 20 years. And then all that we're doing in our financial models is once you get to that there is no better assumption than standard assumptions, standard margin, standard growth rates at that time, then we stop. But even then, like any model, you're putting a terminal value on it. And I always say to my team, just make sure the methodology is the same as if you forecast it out on static assumptions for the next 100 years and discounted it back. So I think when people say, well, how can you forecast more than five years? You can, but that's why you use a discount rate.

And we use a pretty high discount rate around 9%. It's a small range. And so that means even if you're wrong in 12 years, doesn't really have a huge impact on the present value of the cash flows. But as I say, everyone's doing that. They don't even know they're doing it when they stick a simple price earnings multiple on current earnings. And we just want to make it explicit and force ourselves to think about all of the different

drivers of the business. Turning to step three here, portfolio optimization. To me, this is one of the most interesting parts of your investing process. You essentially size your bets based on how attractive they are and then continually update those weightings as market prices change. And I find this interesting because when I look at many great investors, I notice sort of a power law in where their money is made and where their returns come from. I'll mention a few investors here, Benjamin Graham, for example, he's known for buying extremely

cheap companies and flipping it and getting in and out of all these cheap businesses, but he actually ended up making a lot of his money by buying and holding Geico for decades. And then Warren Buffett, he's bought and not sold a lot of these great businesses, Apple, Coca-Cola, there's a list there of great businesses he's owned for quite a large number of years. And then Bill Miller, he purchased Amazon at their IPO in 97. And he said somewhat jokingly on our podcast that the best. investment decision he ever made was buying shares of Amazon. And his worst investment decision was ever selling a share. Now, this isn't my way of saying that we should completely ignore

valuation. But these truly spectacular businesses, I think they can be really difficult to come by. So I'd like for you to talk more about how you guys have combined this approach of buying great businesses, but being willing to part ways with them when generous expectations are built to the price? I mean, the way I think about it, I just think this idea of continuous portfolio optimization, it's an enhancement of a permanent buy and hold approach. So I can't speak to Amazon because we weren't around then. Of course, I can't speak to Geico.

But what I would say is that we have owned companies in our portfolio for 20 plus years now. And we have always so far, and these are really good companies. We have always so far improved upon a buy and hold of return. So some of the buy and hold of returns have been terrific. We've owned a Canadian specialty food company that's actually, I think it's the best in North America. It's very, they have big operations in the U.S. They're based in Vancouver. And if you have had simply bought and held that company in the last 16 years from when we first invested,

you would have a 20% compound of return. That is, as we know, that's really good. And we've earned a 30% compound of return because we have flexed how much we own. But it's always been a holding in the fund. And I can't imagine, it's possible it won't be a holding at some point. But it's because we work hard to embrace, if we think it's real, their opportunity set. And I think this company is a classic platform company that is very good at making accretive acquisitions, bringing smaller food companies into their ecosystem, making them part of the family, as it were, adding value.

And I have had other investment managers over the years because we've been a big shareholder, and it's a varying amount, say to me, you know, it's impressive management, but it's expensive. And if again, back to what I'd said earlier, if you're not willing to give them credit for being that platform company, and I'm going to say, which I know nothing about, so I probably shouldn't, but like a telodyne, like a company that is very good at acquisitions, obviously as a Canadian Constellation software and Mark Leonard that's very good and creates value through acquisitions, And if you're not willing to give that company credit ahead of time looking at what they've done and what they tell you they're going to do when you look at the industry and you, then no, you probably won't own it.

And so I don't like the distinction between value and growth. The company I'm describing is both our high organic grower and also a grower through acquisitions. But like I said, we've owned it for 16 years continuously. we've just owned it in varying amounts, which has allowed us to own less when the market gets really excited and own a lot more when the market gets disappointed with it. They actually released this morning and the market's disappointed. So despite the fact that this was a really good day in the stock market, that stock was down and we were buying more stock, stock that we'd sold at higher prices.

So I'm not disagreeing that a buy and hold, if you're you, you find a great company is, of course, you don't sell it just because the price goes up. But we've layered in, you know, I think of it as simply an additive. Most of our returns come from that fundamental step of finding the kind of companies that we spoke about, but having the discipline to wait to add it to the portfolio where we say, boy, at this price, a buy and hold over the next five to 10 years, it's going to be good. And then if the price goes down from where we added it, common sense to us would say, well, if nothing's changed, you should own more.

And I think we all agree with that, but we've just applied a symmetrical approach and said, but equally, if the price goes up enough and nothing's really changed and you thought you own the right amount at that lower price, you should not own as much. But we're talking about little changes in both directions. And that the core part of our approach is the bulk of our returns, that fundamental approach that those investors that you mentioned have taken. And we've just, I just think of it as it's simply icing on the cake. It's the maybe it's because we come from private equity and you didn't have that lever. I just thought, how terrific is it in the public market that you can take a long-term buy-and-hold mentality with really good companies and then tweak around it?

And it's interesting, you know, as our long-time holdings and our companies get to know us better and better, it won't surprise you to hear they'll say to us sometimes, I get what you're doing. and it's actually really logical, I just wish you'd own us and never sell a share. Because, of course, that's what a good company wants. They want shareholders that are like that, but they don't argue with the logic of it. Let's take a quick break and hear from today's sponsors. No, it's not your imagination. Risk and regulation are ramping up, and customers now expect proof of security just to do business. That's why VANTA is a game changer. VANTA automates your compliance process and brings compliance, risk, and customer trust together on one AI-powered platform. So whether you're prepping for a SOC 2 or running an enterprise GRC program, VANTA keeps you

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of each one. You talked about one example, but I wanted to provide one more example of a portfolio company here out of Canada called Automation Tooling Systems. I believe you first found it in 2004. And if you look from 2004 to 2022, the shares have compounded at 9% per year. But you didn't make purchase initially because the valuation wasn't right. And then when 2009 came around, that's when you recognize that it was trading at a deep discount. And if you look at the share price compounding from there, if you just bought and hold, you'd have earned 22% per year. And because of the system of portfolio optimization, you know, sizing it up when the share price is down, and then pulling back your sizing when the share price runs up, your return in that company is around

30% per year. And, you know, I just think this is just like, it just seems to be something that not a lot of investors talk too much about or have at least seen a success in actually implementing that. Yeah, I mean, it's, so you're right. When we first met them, we love the business. This is today a remarkable company, a global automation company, helping, you know, think of Fortune 1,000 companies around in North America and in Europe, improve and automate their

processes. The current CEO, he's been running a company for six years. He's an ex-Dannaher executive. They listed on the New York Stock Exchange, so they're co-listed now. They listed earlier this year. It's gone from being a company that didn't meet our criteria in 2004 to 2009 with new management where it absolutely met our criteria. But now with current management has just elevated their game to be just a remarkable, remarkable company. And one thing that's important to understand, we are not, we're not trading because we have a feel for where the stock's going. We have no idea where the stock is going. I'm comfortable and give it enough time, the stock will be higher. And I did have a large family out of the U.S. say to me a couple of

years ago, as we first met, he said, you know, we've got some really good managers that we like a lot. But every time they try to trade around one of their positions, they take away from a buy and hold. But you clearly have done the opposite. And how do you explain it? And I said, well, if you'd let me, and I actually, I used ATS automation tooling systems as an example. I said, If you had let me pick when I would buy shares and sell shares, guaranteed I would have taken away from a buy and hold overall of that time. Because then you're trying to read the mind of the market. And I'll give you a more recent example of the stock hit all-time highs in the mid-60s. Now I'm thinking Canadian dollars, so it's somewhat less in US, but it's the same percentage change.

And then as of a couple of weeks ago, it had drifted down into the 40s. I don't know why. They had their first investor day in September in New York, so their first U.S. investor day. And like I said, it's a very well-run company. It's sexy. It's a good story. And so we're just anchored on the return that you will make a few years ago when the stock was a 20 versus the return you will make looking forward when the stock is 65 when it's the same company. We're just going to own less at 65 and a lot more at 20.

And then as the stock drifted down into the 40s, for whatever reason in the last, you know, weeks ago, we bought back stock that we had sold at higher prices. And it's relative, right? So if you think of the COVID crash, we had to pick our spots in the crash of March of 2020. Because if everything falls by 20%, there's really nothing to do. And so what really makes a difference for us is when half the stocks are down and half the stocks are up. But I want to come back to the point that we're long-term owners of ATS. I could see a scenario where the stock, because it's such a cool story, gets captured up and enthusiasm and we trim and trim and possible it could go to zero, but it would be temporary.

I mean, one way to think of it is, I can't think of a situation, which we have at times. So I mentioned how there's three buckets, that middle bucket of 25 or so companies that we owned at a point in time, then we trimmed all the way to zero because the price approached or actually went through our estimate of intrinsic. I haven't yet seen a time where I look and say, darn it, our intrinsic value, our forecast was way too low. and we missed it or we sold it too early. So far, they always come back at some point. They always fall back to Earth. And so I think that's the way to think about it is if you're,

it's back to my comment, if you're giving the company trying to give it full credit for all of the things that they can do in the future, then the risk that, and we're trying not to miss things on the upside, if you will, then we haven't seen where something where we just look back, and say, darn it, we never should have sold it. I want to come back to your comment. You're right about those examples of the company themselves are compounders. And then we've been able to add a bit on

top of that. If they were all that, our returns would be higher. We've got plenty of examples of companies that have not generated those kind of returns, at least yet for their shareholders. But at least even in those cases, we've managed to offset that. So we've got a number of examples where a U.S. company that we added five, six years ago, sitting here today, it's the same share price as whom we added it. And yet, when I look at how much we've increased our intrinsic value, it's a bigger holding today than it was five or six years ago when we added it to the portfolio. So for us, it's a dynamic process. You think of the two components. One is constantly from a new information, what's happened, is it transitory, is it negative? Is it net positive?

You know, my partners and other members of the team will at dinner tonight with one of our companies, they will learn things and they will come back. And that will be part of the process of should we take our long-term view up a bit? Should we take it down a bit? And I would also stress that, you know, some of the younger people on the investment team probably think that the partners are a little slow to react because we don't want to get whipsawed when, you know, when there's a bad quarter or when or something. exciting happens because we've seen it too many times in the past that you let emotion perhaps

come too much into the process. So we're kind of, if we are raising our view, it's been in a, you know, a bunch of steps. And equally when we're derating a company, it's not an aha moment where we say, we thought they were great and then we realized they're not. It's this continuous changing of views in both directions. You had said there that for ATS, if you have had to be the one that was adding and trimming, then you would, if I heard you correctly, you wouldn't add alpha to the buy and hold approach. So what is it about what Turtle Creek's doing that's different than how you might approach it? Is it the emotional aspect you're referring to there? Or what is it? It's taking the market or the mind of the market out of the discussion.

So if you think of all of our holdings and all of the other companies that we're closely following, we have a view of that at the current share price, what is our long-term buy-and-hold, buy-and-hold, and I want to stress buy-and-hold. It isn't about trading. It's just at this point, what is the long-term, like five-to-ten-year return? Is it, you know, each company has a risk-adjusted,

expected return? That doesn't bring the market into the discussion. And so when I look at ATS and I think, wow, like onshoreing, and they are very focused, whether it's battery pack assembly for GM. They've won massive contract with GM who are desperately trying to catch up in the electrification of vehicles or in radiopharmaceticals or in food processing. They're very thoughtful as to where they operate. And so when I look at how they're executing and then you think about automation,

you think about labor costs, you think about the whole trend toward onshoreing, both in Europe and in North America, there are lots of tailwinds. And then you start thinking about, well, the market's going to love that. It's a great story. And they're listing in New York. And American investors don't know about them. And now they're going to know about them. And the stock is going to go up.

And actually, it did go up. But then out of the blue, this fall, it fell from Canadian dollar 65 down to $45 in a fairly short period of time. It ran out of steam and a game. Like I said, one of the, I think, strengths for us is that we don't try to predict that. We just let that wash over us. And so you'll never hear us say, well, I know it's cheap, but what's the catalyst that's going to make it go up? Because we own direct operating companies. We don't own holding companies that have a bunch of pieces of other public companies where people try to do the math of some of the parts.

where if there are different parts, we'll value each of them separately in our own discounted cash flow model. So it's a bottom up operating, owning operating businesses and companies that do not issue equity, that don't need to issue equity. Now, to be fair, ATS did an equity offering, but that was part of the New York listing. Apparently, you need to pay the investment dealers in the U.S. if you're going to get coverage. And so they did an equity offering, but to be fair, They have big, big opportunity set for acquisitions, and they've actually pulled the trigger on a number of them. But setting that unique model aside, we have another long time holding that is Canadian that listed two years ago in New York in anticipation knowing that if he wanted proper following in the U.S., it probably made sense to do an offering, he bought back a lot of stock leading up to that so that he could just, in effect, reissue it. But otherwise, think about our companies, they simply don't, good companies,

great companies, very few of them have so much use for capital that they can't supply that capital through their own cash earnings and they're increasing debt capacity, senior debt capacity as they become bigger. And so if you own companies like that, that then are opportunistic and rational about when they will buy back their own shares. We don't think about the stock market and the stock price as to where it's going to go. We just, there are lots of examples of companies that we haven't done much in their share price for years. We've never worried about it. The U.S. companies I've mentioned that we added the portfolio five, six years ago, and here it is five, six years later, and the share price is the same price. It doesn't bother us. It would bother us

if the company's not doing well, but what we do is we own a lot more of those companies today than we did five, five to six years ago. And at some point, someday the share price will go up. And that being our experience for 25 years, I think it'll be the case in the next 25 years. Another point you've mentioned before is talking about the inefficiencies in the market. And you actually believe that the markets are becoming less efficient. as you've gone on over time with the rise of things like high-frequency trading, social media, leading people to invest very emotionally.

Have you seen these inefficiencies, you know, play into Turtle Creek's returns over time? And is the inefficiencies, you know, tied to the returns you've seen over time over the years? Or is there other evidence that leads you to believe this? I mean, it's not like I can see it in the returns, actually. It's hard to parse apart. I think you'd have to have been operating for 100 years and then look at different periods of time. I still will state as inefficient as things are right now and as pockets of froth have occurred

and being in the market in the last few years, especially during the pandemic and we all know about those pockets. The inefficiencies in the dot com were we have yet to see something like that again in terms of how broad-based it was. So it's hard to claim, oh, things are definitely a better environment for us than they were in the dot-com. I think the dot-com was a remarkably attractive environment for us because back to the thought, we are not a static buy and hold. But I do think, and you see it, the amount of information that is out there for people and how distracting it can be. and you combine that with the increase of index funds, which I think, again, for most people,

it's the right thing to do. You're going to have inefficiencies, but you don't want a completely inefficient market. If it was a completely inefficient market, then even if you own value, it could take a long time for it to show up. So you want a mix. You want short-termism, which I think of as an inefficiency. Maybe other people think not, but some of the, you know, some of the, the companies we own because of the concern of a recession in the U.S. or in North America have been absolutely crushed in the last year or so. And our long-term view in the company

hasn't changed. And in fact, in many cases, as we tend to own the leading company in their industry, they actually can benefit from a recession from an economic slowdown because the competitors are weakened or maybe they're over debt burdened. So you can build a case that a recession is good for the company. You know, back when the in the Euro crisis and there was a long, North America bounced back really quickly after the great financial crisis, Europe, not so much. And I remember saying to people coming back to ATS automation,

because so much of their operations are in Europe and part of their model is buying quality engineering shops that have hit the ceiling in terms of what the founders can do with the business, a softer economy can actually be a great environment for them. But if you think about the impact on value in those companies, if you take a long view, then we end up owning a lot more of those companies. But what's nice is there is enough efficiency in the market and enough people focused on, okay, the Fed looks like they may be done. Wow, it looks like inflation's not so bad anymore. And that has a remarkable effect on the marginal share price on a bunch of our companies.

And so you want both. You want inefficiencies, but you want a quick reaction to whatever they are doing. So I think to a large extent in the stock market, there are lots of very smart people focused on, I don't want to say the wrong things, but not focused on the things that we are focused on. Earlier, you mentioned the term random walk, essentially stocks from day to day, week to week, month to month. It's essentially random whether the stock price is going to go up or down. And you had this chart in your annual report that showed rolling return periods of whether

you're beating the market or not. And over a one month period, you beat the market around 57% of the time. So it's essentially a coin flip, whether it's going to be a great month or not. As you extend that out, you know, rolling one year, rolling two year, the odds of you guys beating the market just continues to go up and up. For example, rolling three-year periods is around 80% outperformance, 80% of three-year periods. And then if you extend that to 10 years, it turns out to be 100%. And I wanted to ask a question around the number of holdings.

You tend to target 25 to 30 names. Is that an amount that just lets you sleep better at night? Or how did you decide on that level of diversification within the portfolio? Well, I can't mathematically justify it or explain it. What I can tell you is when we started, we came out of two ways. It was, well, there were three of us. I mean, seriously, how many companies can three people know well? And we came to a number of 25.

Because the other side was, since we've committed and remain committed to have 100% of our own wealth, our family's wealth in Turtle Creek, how many companies do you need to own to be sufficiently diversified? So we don't own any other asset classes. And we're comfortable that if you own 25 of the type of companies that we've been talking about, and they happen to be in different industries, and they happen to have strong balance sheets, although. I wouldn't, I stress not Fortress balance sheets. We, we hate it when companies talk about fortress balance sheets. That just screams capital inefficiency to us, but strong balance sheets. So again, think of the credit crisis. None of our companies hit a wall back then.

None of our companies hit a wall in the COVID crash. So we came at it from those, from those two sides, sufficient diversification because, sure, 25 companies, but they're not equal weight. you can have 10% as we have had at times in one company of the portfolio. So that's how we got that number. And then in the main fund, it has drifted up over time to 30 because, as I mentioned earlier, we have a deep following or deep knowledge on over 100 companies. So it's been interesting talking to some investors where they don't like that, where that

it's gone from 25 to 30 because they're taught to think you want to just own your high conviction holdings. And my response to that is, you know, that hundredth company that we don't own any of and haven't had for a few years, but we think it's equally as good as the 30 we own, that's an equal high conviction. The way I like to think all of our hundred companies we have a high conviction on, and then we just turn to the market and say, well, this is what we think it's worth or what the long term return will be from here. And as I mentioned earlier, some of them today are trading above our estimate of intrinsic value. In other words, way to think about it, a buy and hold might earn you 5% returns over the next 5 to 10 years. It's a great company, but we are not anywhere close

to owning it. And so that's why the number in the flagship fund has crept up to 30, but I've had to promise some of our longtime investors that I'm going to let them know if it ever goes above 30. Since I mentioned Buffett and Munger, I also wanted to bring up Home Capital Group, a member of our investing community here at The Investors Podcast. He told me about the story of Turtle Creek being the largest shareholder in Home Capital Group, and they were going through some turbulence and some issues a few years back. And then Warren Buffett comes in and purchases a large stake in this company. And I thought it was quite interesting how you guys were the largest shareholder. And then Buffett comes in when the share prices were beat down. So could you share that story

with our audience? Sure. And it was actually Warren and one of his members in his team who did the transaction because they had to act really quickly. So this is a company that think of it as a niche bank. We have five or five, six very large banks in Canada. It's different. in the U.S., but then there are some smaller niche banks. This is a very good deposit-taking institution that got about five years ago hit with just a confluence of events that I won't go into in detail, but essentially there was a classic run on the bank. But because they were essentially, other than a small percentage, match-funded, they

survived the crisis, but the stock had fallen a lot. you say we were the, we were the largest shareholder at about 20% at that point at the lower share price. And it's not very common for us to, to go inside the tent with our companies, but given that they were in crisis mode, we agreed to do that. You know, I will say I was just, and it won't surprise your listeners to hear this, but just the clarity of thought and the intelligence of Berkshire and Warren, just looking at the company, recognizing that it was, you know, call it irrational. Think of it, the bank run.

And it's a wonderful life. You've got valid assets. And as I say, the company had survived, and we, but we were supportive. We thought taking money from Buffett that they didn't need was such a, would have such an impact on the tone and the way depositors viewed the company and the market in Canada. And so Buffett actually wanted to buy about 50% of the company. He viewed it as a long-term strategic holding. But the way the laws work in Canada, a board can issue only 25% shares out of treasury

without shareholder approval. So the transaction was in two steps. So very quickly, he invested to own 25 out of treasury means he was a 20% shareholder, which dropped us down, which then gave us freedom to buy more stock to get back up to 20%. Because that is the limit if you're an investment fund in Canada. But the second tranche was turned down by the shareholders, which I was really impressed with, They didn't try to lobby us because they kind of understood the company didn't even need his first trash of capital.

What they needed was the good house geek being seal of approval. And it was shockingly effective. It just changed the conversation and the dynamic. And then actually two years later, a year and a half later, actually, so the first second trache was turned down by the shareholders. And then because it wasn't strategic, the. the company bought back, made an offer to everyone, but essentially it allowed Berkshire to sell their shares. They bought in at 12.

They sold at something like 17, a year and a half later. And so it was fine for them because it wasn't strategic going forward. They were simply a 20% shareholder of a smallish Canadian bank. But I told the company after that, I said, that's the best trade I've seen a company ever do. Sell stock to Buffett at 12 and then buy it. back from at 17 a year and a half later. And in fact, the company was just taken private this year at $45 a share. So it was a terrific experience in watching the way that they operate. It is what we've always heard in terms of their investment approach. It was quick and highly

principled. But I can tell you that Ted Weshler, the fellow who did the deal with Warren, And he told the lawyers, he said, well, you know, we're going to close on Thursday. We're going to commit on Thursday. And the lawyer said, but what about due diligence? And he said, no, I mean, we've looked at 25 years of audited financials. We're comfortable. But he told me the, I think he woke up in the middle of the night on Tuesday night and just said, well, what if there's a problem inside the company?

Because, again, they had to act really quickly. And I told him, I said, well, we're not on the inside purely, but I think you're fine. And they ultimately were. So, you know, it's one of those classic doing a deal on the back of an envelope, I guess, which has for Berkshire worked out a lot over the years. Add a couple more questions here before I let you go. In your 2022 annual meeting, you talked about how not only your fund has compounded at a magnificent rate since its inception, but you've seen a continuous improvement in your process at Turtle Creek and then in building out your team.

So it seems like you're always looking for these ways to continually improve because you understand the long-term benefits that come from that compounding and that continuous effort that's put forth. So I was curious if you could just speak more broadly about the long-term benefits of compounding, not only in your investments, but more so in life in general. At our holiday party dinner last year or the year before, you know, it's funny because I said that I knew when we started Turtle Creek that we'd put decent. returns. I mean, my two partners are remarkable and together were pretty good investors. But I hadn't thought about the firm we would build and the culture that we would have. And that part wasn't, you know, I guess maybe on the day one strategy, but, you know, I'm quite proud of what we've built. And I think that extends to lots of other parts of life. You know, you take a, we do have turtle in our name. So, you know, the slow and steady endurance model, you know,

compounding is one of the greatest forces in the universe and doesn't have to be that much more when you see the percentage returns if you can do it for a long time. So, so yeah, I think it applies to lots of things in life. And I guess it's partly don't let the current share prices beat you up. I mean, I, yesterday was thinking, about some of the companies in the portfolio and it's human nature to think, you know, it's been kind of present, like, what would make it go up? And then inflation was low today and the market ripped and some of our stocks are up 10, 12 percent. And if you let yourself worry about that, then I think for us, that would be a problem. So I like it when things go up. Don't get me wrong.

But I think partly we have the temperament to hit the reset button. So in the summertime, our unit price was an all time high. And I'm thinking, this is great. I'm glad that we're in an all time high. And then August came and then September and then October. But we have the ability to hit the reset button and say, okay, the companies are still the same companies. And this is providing us an opportunity to improve upon that buy and hold. And the way to think about us is, whatever our unit prices today, whatever the returns have been up to today, they wouldn't be as high if there hadn't been a credit crisis. And they wouldn't be as high if there hadn't been a COVID crash. And so I think if you're able to take that long view and having done the

fundamental work, then you just let everything else wash over you over time. That's really interesting. If there hadn't been this market turmoil, then your returns wouldn't have been as high. But I think back to like the GFC, for example, the unit price of your shares were declining. So what was it about, you know, a period like that? If it hadn't had happened, then the returns would have been lower. Well, I mean, let's come back to just one simple example. You mentioned automation tooling systems, ATS. The stock was in the 20s when we first met them.

And there was actually a board chain. It was a proxy fight in 07 and a much better management team installed. And they were improving the business. We're not much for investing in turnarounds, but we were able to visit them frequently, watch what they were doing. They had a strategy to sell off assets that weren't core that the founder who had passed away had diversified over time into and to focus instead on the core automation business, which was the gem.

So you had this remarkable situation where the results are getting better. it was a little bit of noise in the financials, and then the GFC hit. And the stock went from in the double digits to in January of 2009 to $5. It wouldn't, I don't think in any scenario would have gone to $5, but for the credit crisis. And so that was a remarkable opportunity. And we added it to the portfolio at that point and made it a decent holding. And then over the next few months, all that happened was the stock went down. And it actually went as low as $3 a share.

And now if I'd known it was going to go to $3, I would have waited. But we were buying at each price point lower all the way down. And if it had gone below $3, we would have bought more. It turns that it only went as low as $3. And this is back to my point. You can never predict these things. If there hadn't been a credit crisis, think of the spring of 09 where the S&P, 500, I think, hit the famous 666 number. We would not have had the opportunity to buy stock,

let alone at 5, all the way down to $3 a share. So that's what I mean by those market dislocations have provided opportunity to us. You have to have the temperament and you have to be willing to buy more stock at lower and lower prices, which needs the building block of having done the fundamental work on each of the companies so that you're not worried that the market knows something that you don't know. I'm just doing the math on when your returns started on your website. Is your fund crossing 25 years this month? Yeah, it crossed actually at the end of October, 25 years.

Well, now that you're 25 years in, I can't help I ask what you're looking forward to in the next 25 years. Well, it's funny. So I make a point of never talking about those guys in Omaha, but you've brought them up a couple of times in this conversation. So I will bring it up. You know, I would tease him one of my partners the other day that he's about to turn 60. He did his MBA in Chicago more than 30 years ago. And when he was there, he heard about these guys in Omaha that were pretty good invest, like it was pretty good opportunity. And he looked into it and he said, oh my God, like this Warren Buffett, he's in his 60s. And just decided, well, that can't be interesting because how much longer can he do it?

And so I was pointing out to Jeff, you know, Jeff, you're going to be almost as old as Buffett was when you first found Berkshire all of that long time ago and then decided it wasn't worth digging in on. And so I can't suggest that we're going to make it that far, but the plan is to try. We love doing this. The three of us as founding partners are all in 100% engaged and we love it. But I think part of the culture here, or I know part of the culture here, it's a very collaborative model. And so everyone on the investment team beyond the three founding partners, whether it's people who've been with us for 15 to 20 years or starting people, it's really a team approach. It's a collaborative approach. We then can't point things. at somebody saying, well, how come the company missed or because everyone's bought into the forecast for each of the companies? And I think that creates longevity. So we'll see. But what I know and what my partners know is that the portfolio today has never been as high a quality in the past. And if you think about it, it's kind of what you would expect, right? It's not like we're identifying and wanting to dig in on less quality companies. And if any,

thing over the years, we keep raising the bar on the companies that we think meet our criteria. Why is that? Because over the last 15 years, as we've met these remarkable U.S. mid-cap companies, it causes us to just elevate the criteria for a company that actually meets our terms. And it doesn't mean they all have to be perfect. I mean, if you only would look at perfect companies, you aren't going to have a very long, long list, but they have to be above average. They have to be honest. They have to be shareholder focused. But I remember a few years ago, we met with a Canadian company that we've known about

for a long time, but it had had management change. And so we met with them. And we thought, you know, if we hadn't met all of these U.S. companies in the last 10 years, we would have been all over this. But we've just elevated our view. And I think we'll continue to do that as we meet more companies. companies that just keep raising the bar. And that's what makes my partners and I excited because we recognize the portfolio in terms of the quality. And sometimes I look back and think, how did we earn

those returns with those companies? I think a lot more confident with the companies we own today than I would have been 10 or 15, 20 years ago. Well, Andrew, this was amazing. It's really an honor and privilege to have a chance to chat with you on the show. Before I let you go, how about you give the audience a handoff to where they can learn more about you and Turtle Creek and your funds? Sure. Well, we have a website. You just Google Turtle Creek, Toronto, I guess, and you'll find us.

When you go to the website, if you're an American, you have to click that you're a U.S. citizen. There is a tab where you click that you're an international investor, which has full access to the website. But if you, as you go through the U.S. portal, can then qualify U.S. investors, and then you have full access to the website. We've got, I think, pretty good content with more recent annual letters, some recordings of interviews and our three most recent annual meetings. And then we actually write a lot. We've got a series that's called the Dow of the Turtle, the way of the turtle, which captures, I think, a lot of our investment approach. So it's a

good starting point. I'll echo that there's a lot of investing wisdom on your website from the letters to the recordings of the annual meetings. There's a lot of great stuff in there and I'd encourage the audience to go check it out and hope you enjoyed this chat with Andrew and Andrew, I can't thank you enough again. Thank you for joining me. Now, this was a lot of fun, Clay. I'm delighted to be on your show. Thank you for listening to TIP. Make sure to subscribe to Millennial Investing by the Investors Podcast Network and learn how to achieve Financial Independence. To access our show notes, transcripts or courses, go to theinvestorspodcast.com.

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