Disclosure
Seetharam: Stockbridge sells troubled holdings rather than pursuing activist board seats
“So the key is if we have a problem with the company, it's better for us to sell than it is for us to go on the board and try and change it.”
Insight
Seetharam: Public investing gives less data than PE but no time constraints
“In the private equity business, the way it works is you have access to a data room. And you have a certain amount of time to understand as much as you can about a company with full access to the information and the management team. So if you were to use an ana…”
Assertion Not checkable as stated
Seetharam: Stockbridge matched private equity diligence conviction on Skillsoft
“There was a business that we were invested in at Stockbridge, a company called Skillsoft. It's an education software business that Berkshire private equity ended up taking private. And we got to see what public information would allow us to understand about th…”
Disclosure
Seetharam: Stockbridge Rarely Encounters MNPI from Berkshire Private Equity
“So we found it's extremely rare that we end up with MNPI on a company and the places where we've run into issues They've tended to be opportunities, not conflicts or issues. We've co-invested in things.”
Disclosure
Stockbridge has entire team vote on admitting portfolio investments
“As an entire group, we discuss every idea that's making its way into the portfolio from a very early stage, which we call our tear sheet stage, where we're just introducing the whole team to the business to a final investment memo. Everybody from the newest an…”
Disclosure
Seetharam: Stockbridge passes on Nvidia because it sits outside its competence
“While let's say a company like NVIDIA is an extraordinary business by all accounts and one we've looked at, we just don't think we would be a great owner of that business at this point in time. Because while I can tell you all the great things about NVIDIA, I …”
Insight
Seetharam: Spreadsheet valuations fail to model great companies creating their own luck
“Excel-based valuation methodology doesn't really capture the full distribution of outcomes. A good business with great tailwinds and a great management team can create their own luck, and it's hard to model that.”
Disclosure
Seetharam: Selling Winners Too Early Is Stockbridge's Biggest Mistake
“Selling winners too early has been a constant source of frustration, one that you can just open up your Bloomberg and see it hit you in the face every single day.”
Disclosure
Stockbridge does multiples more research after buying a stock to combat bias
“We do a lot of work up front, but we do multiples of that work after we own a company. And just ensuring that we're not holding onto something simply because we did a lot of work and we have endowment effect and it's in our portfolio.”
Insight
Seetharam: A Very Small Number of Decisions Drive Portfolio Returns
“It's very easy in this to think about making a shorter term trade or adding a smaller position to the portfolio, but that's not really what we're set up to do. And when we do that, We're more likely to make a mistake, and so what we've really honed in on is ju…”
Disclosure
Seetharam: Stockbridge abandoned short selling after a one-week trial
“For the first two years, I think we invested exclusively internal capital and tried a lot of things. So like Rob mentioned, we tried to short. The first short, I think, lasted a week. And we realized we were not going to be good at it. We didn't want to do it,…”
Assertion Not checkable as stated
Stockbridge built a database of every US quarry and surrounding population trends
“And one of the things we've done is assembled a database of
Every single quarry in the United States and what the ownership is of that quarry and the population trends around that quarry.”
Disclosure
Stockbridge makes only two to three new investments per year
“We invest in two to three things a year. We probably look deeply at 10 to 20 things a year with a pretty big team, and so the several hundred that we look at, we're putting them down very quickly for one of those reasons.”
Disclosure
Stockbridge and Berkshire PE acquired ~20% of ADS in 2017 after accounting restatement
“In 2017, we bought about 20% of the company after they were through their accounting restatement and then subsequently joined the board.”
Insight
Seetharam: Long-term investors must track non-price markers to validate an investment thesis
“It's important to have evidence in a long-term investment that things are working. That may or may not show up in the stock price, but there's a set of markers along the way that give you confidence that your long-term thesis is right.”
Disclosure
Seetharam: Berkshire Private Equity Targets Smaller Businesses Than Stockbridge
“Berkshire private equity tends to invest in smaller businesses has always invested in smaller businesses than we tend to invest in. So there's very little direct overlap in the companies we're looking at.”
Disclosure
Berkshire Partners held Advanced Drainage Systems continuously from the late 1980s until 2010
“Berkshire Partners invested in the company in the late eighties when it was a small agricultural plastic pipe producer and held the business continuously until 2010 through multiple funds and then sold it to another P firm who took it public in 2014.”
