Sep 16, 2021 · 1h 1m · capital-allocators
Ryan Batchelor – Clifford Capital Partners (Manager Meetings, EP.11)
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
Guest host Paul Black of WCM Investment Management interviews Ryan Batchelor, co-founder of Clifford Capital Partners, detailing his journey from forensic accounting to managing a concentrated value strategy that combines wide-moat compounders with deep-value turnarounds.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Ted holds 11.8% of the talking time here. How this is scored →
Ted as informed peer 3.1 Guest teaching 4.8 Guest disagreement 0.3 Ted pushing back 0.3
speaking balance: gold is Ted, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 13:00 Ryan on confronting Spiegel executive management
Ryan recalls the CEO swearing and kicking him out of the office when his audit team refused to overlook loan loss accounting irregularities.
Hardest push from Ted ▶ 27:25 Paul Black queries the difficulty of starting a boutique firmPaul challenges Ryan on whether transitioning from an analyst to launching an independent firm with real operational risk was actually easy.
Biggest teaching moment ▶ 38:20 Ryan explains the non-obvious GameStop store lease catalystRyan educates the listener on how GameStop's short-term zero-cost store lease exits made closing retail footprints immediately cash-flow positive.
Ted holds their own ▶ 32:05 Paul Black demonstrates deep insight into computer arbitrage of value metricsPaul steps in with sharp domain expertise, articulating why traditional quantitative value metrics failed over the last two decades as computers eliminated number-crunching advantages.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Ted as informed peer | Guest teaching | Guest disagreement | Ted pushing back | Why |
|---|---|---|---|---|---|---|
| Episode Overview and Capital Allocators University Announcement | 4 | 2 | 0 | 1 | Ted Seides opens with an overview and interviews Paul Black about WCM's strategic investment in Clifford Capital. Paul explains his relational diligence philosophy while Ted guides the discussion smoothly. | |
| Ryan Batchelor on Early Career and the Spiegel Audit | 3 | 5 | 1 | 0 | Paul Black asks Ryan Batchelor about his career beginnings. Ryan narrates his experience auditing Spiegel at KPMG and uncovering accounting issues that ultimately triggered Spiegel's bankruptcy. | |
| Mentorship, Business School, and Formulating Investment Strategy | 2 | 6 | 0 | 0 | Ryan details how Wayne Pearson encouraged him into portfolio management, his business school mentorship under Brian Yachman, and the formulation of the dual core value and deep value strategy. | |
| Professional Experience at Morningstar, Wells Capital, and Launching the Firm | 3 | 5 | 0 | 0 | Ryan recounts his tenure at Morningstar analyzing Mastercard's IPO, followed by joining Wells Capital with Bob Costamaris navigating the 2008 crash, and founding Clifford Capital in 2010. | |
| Clifford Capital's Five Differentiators and Portfolio Architecture | 5 | 5 | 1 | 2 | Ryan details the firm's five differentiators. Paul actively contributes by analyzing how quantitative computing eliminated simple multiples-based value edges, validating Ryan's focus on qualitative catalysts. | |
| Sponsor Message: Ridgeline Cloud Platform | 2 | 6 | 1 | 0 | Following the mid-roll, Paul prompts Ryan on specific holdings. Ryan walks step-by-step through their deep value thesis on GameStop (short store leases, console cycle) and Abercrombie & Fitch. | |
| Core Value Methodology and American Express Case Study | 2 | 5 | 0 | 0 | Ryan walks through the core value methodology using American Express losing the Costco account as a case study in business-model strength and natural inflation hedging. | |
| Cultivating Firm Culture and Lessons from Seth Klarman | 4 | 5 | 0 | 0 | Paul asks about organizational culture. Ryan shares his 10-minute call with Seth Klarman emphasizing camaraderie and having fun, while Paul adds insight into why small teams consistently outperform. | |
| Personal Reflections: Investment Mistakes, Upbringing, and the Abundance Mentality | 3 | 4 | 0 | 0 | Paul wraps up with closing personal questions. Ryan discusses an early stock mistake in a Puerto Rican bank, his mother's eye for bargains, and adopting an abundance mindset. |
Statements from this episode (11)
Black: WCM did under 2% of typical due diligence on Clifford Capital
“It's probably less than two percent of the work that most people do on our firm. As I said, like them, passionate, good track record, probably high probability of success going forward.”
Batchelor: KPMG withheld Spiegel audit opinion after team found accounting oddities
“So make a really long story short, after a lot of analysis, focusing on these few things, we identified some accounting oddities that ended up causing this bank to liquidate, and Spiegel to go bankrupt. KPMG did not file an audit opinion based on the work that…”
Batchelor: Investors should avoid stocks with unanimous Wall Street buy ratings
“If you go to Wall Street,
And the 10 analysts tell you need to buy this stock.
So, absolute unanimity.
More than likely, you should not take their advice.”
Batchelor was one of two analysts to rate Mastercard IPO a buy
“So in 2007, the first time Morningstar had actually done a pre IPO analysis of a company was Mastercard. And I was pegged to cover Mastercard before there was any price on the stock. Morningstar usually had publicly available prices. So this was a first buildi…”
Batchelor: Overweighting deep value added 50 percentage points of return
“We've actually done an analysis of this and over the first 11 years, almost 11 years of our all cap strategy, it's added an incremental 50 percentage points to the total return, the ability to opportunistically overweight that deep value sleeve.”
Black: The competitive edge of crunching numbers no longer exists
“And that's one of the lessons I think that I've learned over the last 30 years is the competitive advantage of just crunching numbers doesn't exist anymore. Maybe 30 or 40 years ago it did, but not today.”
Batchelor: Value investing generates alpha because people fear looking dumb
“When you're a contrarian and things go wrong, you look like an idiot, and that's an occupational hazard that a contrarian has to live with. Maybe it's something in my personality type that I'm okay looking dumb occasionally, but that psychological difficulty i…”
Clifford Capital sold GameStop in December 2020, narrowly missing meme rally
“We sold GameStop in December of twenty-twenty. So prior to the excitement with the Reddit army”
Batchelor: GameStop now requires everything to go right to profit
“When we were buying it, almost everything had to go wrong to lose money in GameStop. That's a lot different than today, where almost everything will have to go right to make money.”
Batchelor: Abercrombie traded at half Hollister's standalone value in 2017
“Abercrombie & Fitch was trading, in our opinion, well below what even Hollister was worth. So we valued the company and said, in rough terms, business is trading at half of what Hollister is worth”
Batchelor: American Express's business model is a natural inflation hedge
“Amex has a fantastic business model. They keep all the economics of their cards, which is rare. And also inflation protection, which is a big deal in today's environment. Wasn't a big deal when we purchased it, but we were getting inflation protection for free…”