Adam Karr discusses the necessity of client alignment and managing redemption pressures when implementing long-duration investment strategies.
Insight
Karr: Scaling into new positions is an error driven by regret aversion
“So when I'm initiating a position, I tend to scale into it. So let's say I want to take it to three percent of capital. I'll buy 50 basis points, you know, another 50 and I'll scale into it. Turns out that's wrong. The bias that I'm demonstrating the reversion…”
Disclosure
Karr: Orbis avoids investing in attention-seeking and high-lifestyle CEOs
“Generally not. I mean, it's a part of the mosaic of, you know, what will be the driver. I mean, it's an interesting thing with CEOs are like, what are the characteristics that allow one to be in that seat? And they're not always correlated with the skills that…”
Insight
Karr: Anyone can have any mentor by studying public records obsessively
“You can have any mentor in the world that you want. There's so much out there, like, pick somebody that you really respect, and just, like, be a sponge, get obsessive, learn everything you can about them. How did they do it? What did they do? Like you can real…”
Insight
Karr: Deep research reveals when consensus bear cases form bull theses
“Some of my favorite investment situations are the bear case is the bull case. So there's this common bear narrative. And if you don't kind of do it on your own work, if I were bringing up this name and I was talking to someone, they would have told me all of t…”
Insight
Karr: High personal overhead ruins investors' risk-adjusted decision making
“How you run your personal life. Very much impacts your ability to make good decisions, particularly if they go sideways, right? And so you see people in the industry who then, you know, adopt a certain lifestyle, a certain fixed cost base, and then, like, you …”
Insight
Karr: Cigar-butt investing is profitable but difficult to scale
“And so if you're playing cigar butts which can be very profitable. But it's difficult to scale that. And so as his capital grew over time, you know, you have to think about how you show up and how you approach it.”