[REPLAY] What You Learn About Business Deals After: 12,000 Deals Reviewed, 1,500 Deep Dives, 125 Site Visits, and 7 Portfolio Companies with Brent Beshore - [Invest Like the Best, EP.100]

For the 100th episode, I’ve brought back my good friend Brent Beshore. Brent was the 10th guest on the podcast, after we met because of a mutual interest in capital allocation. I quickly learned that Brent was one of the most unique and thoughtful investors around. He was an entrepreneur from the moment he left school, trying many different things before finding a fit buying smaller business with the intention of owning them forever. What amazes me about Brent is his encyclopedic understanding of business and the nuances of different business models and deal structures. This comes from reps. He and his team have looked at about 12,000 deals over the years, at every kind of business that you could imagine. I’ve been with him when he goes through this process and it’s fun to hear what makes certain businesses stand out from others, which is largely the topic of this conversation. You all know transparency is key for me, so it’s important to know that my family and I are investors in a fund called permanent equity, run by Brent and his firm Adventure.es. To commemorate this milestone episode, I can think of no one better than Brent, because he exemplifies what has made this podcast so fun for me: learning from other people who are willing to share what they themselves have learned through fun, blood, sweat, and tears. Please enjoy our conversation, and thank you so much for coming along on this journey. I can’t tell you how much it means to me. For more episodes go to InvestorFieldGuide.com/podcast. Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub. Follow Patrick on Twitter at @patrick_oshag Show Notes 2:02 - (First Question) – How does he think about optimizing risk in terms of the capital stack when looking at deals 5:27 – What conditions would they add debt down the road after investing in a company 6:52 – What business sectors are most intriguing for Morgan to invest in right now 6:57 – Trent Griffin Podcast 9:34 – Why no HVAC businesses if it’s such an attractive sector 13:56 – thoughts on rolling up similar businesses and horizontal scale 16:04 – Another industry Brent would focus on 18:02 – Difference between property management in larger cities vs smaller metro areas 18:51 – What role does profit margin play when Brent is evaluating a business 22:46 – The appeal of a hyper cyclical business 22:52 – Brent Beshore Podcast Episode 27:27 – Favorite counter cyclical business 28:14 – How they judge assets, tangible vs intangible assets 33:58 – How does he think about wage inflation when considering the cost of a business 37:21 – His fascination with pet crematoriums 38:57 – History of the permanent equity fund and the changes by having a larger pool of capital 43:48 – Pitching investors on a new structure for the business 46:14 – How will this business model scale Learn More For more episodes go to InvestorFieldGuide.com/podcast. Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub Follow Patrick on twitter at @patrick_oshag

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Patrick O'Shaughnessy?

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• 0:32Patrick O'Shaughnessy?

  This week got away from me, so instead of a new episode, I'm replaying one of my favorites with my close friend Brent Beshore. The time is good as Brent's firm changed its name this week. It had been called Adventures, but is now called Permanent Equity, a convenient name as it's also the topic of our conversation. We'll be back next week with a new episode of Invest Like the Best.

• 0:53Patrick O'Shaughnessy?

  Hello and welcome, everyone. I'm Patrick O'Neal and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, methods, stories and of strategies that will help you better invest both your time and your money. You can learn more and stay up to date at investorfieldguide.com.

• 1:13Speaker 02

  Patrick O'Neal is the CEO of O'Neal Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Neal Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of O'Neal Asset Management may maintain positions in the securities discussed in this podcast.

• 1:38Patrick O'Shaughnessy?

  For the 100th episode, I've brought back my good friend Brent Beshore. Brent was the 10th guest on the podcast after we met because of a mutual interest in capital allocation. I quickly learned that Brent was one of the most unique and thoughtful investors around. He was an entrepreneur from the moment he left school, trying many different things before finding a fit, buying smaller businesses with the intention of owning them forever. What amazes me about Brent is his encyclopedic understanding of business and the nuances of different business models and deal structures. This comes from reps. He and his team have looked at about 12,000 deals over the years at every kind of business that you could imagine. I've been with him when he goes through this process and it's fun to hear what makes certain businesses stand out from others, which is largely the topic of this conversation.

• 2:21Speaker 03

  You all know transparency is key for me, so it's important to know that my family and I are investors in a fund called Permanent Equity Fund One, run by Brent and his firm, Adventures. To commemorate this milestone episode, I can think of no one better than Brent because he exemplifies what has made this podcast so fun for me, learning from other people who are willing to share what they themselves have learned through fun, blood, sweat, and tears. Please enjoy our conversation and thank you so much for coming along on this journey. I can't tell you how much it means to me.

• 2:51Patrick O'Shaughnessy?

  We're going to come back to the story of the Permanent Equity Fund, but given the kind of funding source that you're working with, looking at this part of the market, you mentioned this idea of how to work with the capital stack depending on the deal. Maybe you could talk about the way you think through that for each individual company. So if your primary sources of financing are committed equity capital, seller leverage, and bank debt, how do you think about that mix, both from a risk perspective and from a return perspective, when you're sort of optimizing each deal?

• 3:20Speaker 03

  When you're thinking about structuring a deal, you've got to look at what is the company? I think that too often, your mind first goes to sort of how much leverage can you put on a company and how can you make the equity look as good as you possibly can? And I think that that game's a dangerous one because it always leads you down to just stacking debt on debt on debt and trying to put in as little equity as you possibly can, which can work. Leverage is merely an amplification of the underlying value of the business. So if the business goes well, it's going to go great with leverage. The challenge is even if the business goes okay, like good, a family that owned it that had no debt on it would be perfectly happy with the performance, you stack enough debt on it and it quickly becomes a really dire situation.

• 4:03Speaker 03

  And then you start making just really dumb decisions that don't make any sense in the grand scheme of things, but you have no choice. You have to meet covenants, you have to meet your repayment schedule. And so the first thing we think about is what is the company? What is the industry? What is the cyclicality? And a lot of people, you know, you sort of take the last two or three years and you extrapolate out into the future, trees are growing to the sky, you know, that whole business. And it doesn't make any sense. So cycles happen. We're in a current, long dated up cycle. No one has any idea how long it's going to last. And I certainly have no predictions about how long it's going to last. We could enter a down cycle soon, or we could go another five, seven, 10 years. I have no idea.

• 4:42Patrick O'Shaughnessy?

  I saw a funny trailer showing Australia hasn't had a recession in 26 years or something. So weird stuff happens.

• 4:46Speaker 03

  Yeah, weird stuff. And I think that's the key, though, is many more things can't happen than do happen and will happen. You've just got to look at the entire spectrum and say, how are you going to take a business and continue it to be durable? And for our model, since we have buy with no intention of ever selling, it's real in the sense we want to own this business through up cycles and down cycles and multiple up cycles and down cycles. So the way we think about it first is almost all equity. We almost default to no senior debt, which makes us the oddest of ducks in private equity. And then we focus on using seller debt to sort of serve two purposes. One, it does provide some financial leverage, but more importantly, it just really aligns interest. So we do a lot of things

• 5:30Speaker 03

  around how do we provide a win-win situation where a seller who believes strongly in the business, we're not putting senior debt, it's usually flexible seller debt. And even if this business stumbled or had an issue, you're talking to the person that loves this business, that cares about the people, they're going to help figure it out. And we're putting such a modest amount of even seller debt, I mean, maybe two turns at most of seller debt on the business that we really like to do that as the primary point of leverage. We will, though, from time to time, put senior debt on a company. I think that in some situations, if there's a really big need at cash close, we won't do it to win deals, but we'll do it if we need to put more cash at close to help exit certain people out that are sort of older, that don't have the stomach to take a seller note for an extended period

• 6:15Speaker 03

  of time, something like that. There's nothing wrong with that.

• 6:17Patrick O'Shaughnessy?

  What about further down the line? So let's say you do a deal that's majority equity at close, some seller leverage and no senior debt. And you're four years down. Like, what are the conditions down the line that you would then put debt on the company, perhaps to provide return to investors, or because you feel the risk is way lower? What are those conditions?

• 6:37Speaker 03

  Well, I think the way we think about it is since we want to own this business for a long time, when you're doing a dividend recap, which is basically what you're talking about, you lever up the business and then distribute out the cash. I mean, you're really just, you're accelerating future earnings into the present and distributing them out now, which is fine. You're just trading the future for the present. Most people do that because they get into a heads I win, tails you lose type situation, where if you put a bunch of, you did a dividend recap and you put a bunch of senior debt on the company, and it's non-recourse, and you pull the cash out and you get your investors sort of made whole or a good return, and then it's sort of, you're playing with house money. That's the way they look at it. Well, that only works if you're willing to walk away from a company.

• 7:18Speaker 03

  So if you're not willing to walk away, it absolutely does nothing other than just accelerate the payments. And I mean, you're going to look at what are interest rates? I mean, what is the opportunity cost on that money? And again, like if you're not going to walk away, it's pretty dumb to try to even put a moderate amount of leverage on the company. So we may do it, but it's going to be few and far between. And I think that we would never do it to where we would endanger the future of the company.

• 7:42Patrick O'Shaughnessy?

  Yeah, really interesting. So I'd like to get into some of the, in my conversation with Trent Griffin, one of the popular areas was just kind of picking apart elemental business ideas. And so I'd love to riff on a few of these with you and how you think about these concepts as you're looking through the thousands of businesses that you see every year. Before we do that, I thought it'd be fun to ask, if you had to right now narrow your focus, and you could only be looking to buy businesses in, let's say, two to three specific industries, what would those two to three industries be? And then after we get through that, we'll go into these operational business levers and how you think about them.

• 8:17Speaker 03

  The business sectors we really like tend to be more blue collar, tend to be more direct to consumer. So when you think about the direct to consumer, blue collar, immediately your mind goes to home services. We think that there's a massive tailwind if you look at bifurcation of wealth moving forward as a sort of a tailwind. You look at what happens when people sort of attain a level of financial security. What do they spend their money on? And almost immediately, people start buying time. That's the almost immediate thing that people do. And they buy time in ways that not only saves them time, but also saves them headache and pain. So when you think about most people, I'm not, you know, there's freaks out there that love to mow their lawn, but most people don't. People, some people love gardening, but most people don't. Most people just want house as a service or office as a service.

• 9:02Speaker 03

  And so when we think about the enduring need for the home, the enduring need for the office, for spaces. If you look at the growing footprint of square footage, it's kind of a common thing that houses are getting bigger. And people don't want to take care of them. And so this leads into everything from pest control to HVAC plumbing. I mean, and there's lots of nuances in these. These are very broad categories, lawn care, landscaping. Obviously, we're in the pool business, pool building business. We think that's an area that, you know, we joke until people stop dipping their bodies in water for pleasure will be fine. Been doing it for a couple thousand years. I think we'll be probably good in the future to do it.

• 9:42Speaker 03

  So when we think about industries, we always want to have a thesis behind why people will want that in the future. And what could happen that would cause somebody to not need that in the future? So a great example of this is air conditioning. I would probably rather have air conditioning than the internet personally. It's an amazing thing. If you think about being comfortable and like low humidity, especially where I live in the summer. It's a utility in a way that very few other things are. And so what you get is when you get larger square footage and you get aging infrastructure of that square footage, you get the need to service this equipment frequently and accelerating. And that's the sort of interesting nonlinear result of that.

• 10:24Patrick O'Shaughnessy?

  So question on HVAC. So you don't own an HVAC business now and you've looked at, you've looked at a million. So on the one hand, it's attractive as a subset of home services. So what has stopped you from owning an HVAC business if it's so attractive?

• 10:36Speaker 03

  Great question. Yeah, we've looked at hundreds and hundreds of HVAC companies and we love the space. And we think that it's a really promising area that can also have a lot of innovation hit from a consumer of the product standpoint. I think there's a lot of things you can do to make the purchase of that service and equipment a lot more seamless than it is now and a lot more available.

• 10:52Patrick O'Shaughnessy?

  What do you mean by that?

• 10:53Speaker 03

  Well, so the standard is, I was joking, I think I tweeted this out the other day. I would love to have some sort of like small business callback index. When I joked about that is because if you just randomly in a city pick, let's say, five HVAC service companies and you give them a call and you say, my air conditioning went out, when can you be here? The odds are that maybe one or two of them even call you back. And of the one or two, the odds they show up on time are like virtually none, virtually zero. So you like, you're coming into it, anybody who's, who's had work done on their home, home services of any type or office services knows this. The joke's always like, you get these windows from even like the cable company that's like, we'll be there between 11 and three and they show up at six o'clock at night.

• 11:36Speaker 03

  And they're like irritated that you're not ready for them to come hang out with you. And so I think there's, there's a lot of using technology, using basic business practices and frankly, having a culture of caring that I think you can, you can just out compete in this area. Now, why haven't we gotten involved? That's a great question. We would love to get involved with a plumbing services, any type of home services, we, you know, we'd love that. The issue is finding a team that you can scale. These are all small businesses. So there's a reason why these businesses are small and it's usually because they're not built to scale. And we're not in position, at least not right now, to come in and do all the work to professionalize an organization. So we've got to find an organization that we want to partner with that is at least

• 12:21Speaker 03

  kind of halfway to professionalization. We like to find teams that are trying to run harder and go further, but maybe have hit the ceiling of brute force, but are trying, are chasing, you know, a lot of ways to scale. It's just really hard to find that. I mean, we find a lot of companies that are making a million dollars out there that when you talk to them, they're really happy with making a million dollars. And look for a business owner making a million dollars a year. It's a lot of money, especially a lot of money in Des Moines. I mean, again, these are the, these are the chairman of the country club. So it's not like, that's not a great business and we're not saying it from, you know, being judgmental in any way. It's just, it doesn't fit with where we are now. We can't take a million dollar business that's built around sort of one person's personality and do the work necessary to build out the systems and scale and recruit the talent and do all the things you need to do to scale.

• 13:06Speaker 03

  So. We've really got to find a team that's already kind of pre-built, or at least being on the way to being built. And most of the time in home services, the issue is those teams get formed around construction. So this is a really big divide in home and office services versus construction. And most of the time, you think about it, the construction leads into the service. So whoever builds your house, you say, okay, well, I need the whatever service. Well, who's going to service is the person who installed it. So the install leads to the service. But then the problem becomes you've got a construction organization, you've got a service organization that are kind of lightly bolted together. And it's so much easier in up markets to make money in the construction side, the install side. And the service side looks puny compared to it. So it gets starved of all the resources. It doesn't get the attention. There's no innovation there.

• 13:52Speaker 03

  And so what you have is oftentimes all the focus being on the highly cyclical, very, very large construction side. And we don't want that. We don't want that side because I think full cycle, they don't make much money. They look like they make a bunch of money when the times are really great. And then they lose a bunch of money and you have dire times when things go down. It's incredibly cyclical. We like the service organizations, but you can almost never find a pure service organization or a service dominant organization. And so, yeah, we got to find a team. We got to find a service dominant organization. And then we've got to have all the normal factors line up. And even if you find, I mean, we've found probably 50 legitimate candidates over the last maybe two or three years that are somehow in home services that have the right fit, the right match. But you just can't get the deal done.

• 14:38Speaker 03

  You know, you got to agree on price. You got to go through all the normal stuff, due diligence. You got to, I mean, it's got to work, right? And so it's just incredibly low odds.

• 14:46Patrick O'Shaughnessy?

  A popular idea that I know, just having talked about this space now with so many different people, the gut instinct would be like, okay, well, why not just not worry about scale and just roll up a collection of one part of the stack? So roll up the million dollar earning HVAC businesses. Don't worry about growth and scale. Scale horizontally versus vertically. What do you think about that idea? That strategy of creating a roll up and sort of centralized expertise, getting really good at just one thing?

• 15:12Speaker 03

  I mean, it sounds great. It just doesn't work. So that's the problem.

• 15:15Patrick O'Shaughnessy?

  Why not?

• 15:15Speaker 03

  Yeah. So what's a bigger disaster than one million dollar earning company that's built around one dominant personality, which all businesses of that type, I mean, all business internally is a disaster. It's just like a functional disaster. Almost every operator I know is just trying to go as hard as they can and just you're putting your finger in the leaks and just working your tail off all day long. And so how in the world, if you're putting your head down and you're a founder dominant organization with very little scale, with very little structure, how in the heck do you slam together two, three, four, five of these things and somehow standardize? I mean, it is like the most mind bogglingly difficult thing and it's been done before. There's a couple of people that I know that have done it successfully.

• 16:00Speaker 03

  It's never actually though, done well in the long term. So you can temporarily build an organization that looks like sort of at the 30,000 foot view that it's successful, right? You can produce a lot of EBITDA for a short period of time and then the wheels come off. I mean, you don't have the infrastructure in place. You don't have the systems and you have a lot of people who want to do it their own way and everyone's doing it a different way and everyone's been doing it a different way, trying to get everyone to do it a different way than they've been doing it and trying to convince them that inherently the way they've been doing it's been wrong and but they've been successful. It's just like just very weird psychology that gets involved. So I've never, I've never seen that done successfully for very long. And when I get into the nitty gritty, I mean, it would be wonderful, magical to take five,

• 16:44Speaker 03

  seven of these in, you know, big cities that are each making a million dollars and each take them to making $5 million and slam them all together. Like that's a home run. I don't see how functionally it actually, you could actually make it work.

• 16:54Patrick O'Shaughnessy?

  So outside, we'll do one more and then, and then go to the levers. Outside of home services, you're excluded from that part of the world. What would be the next industry that you would focus on?

• 17:01Speaker 03

  So I think another area that's interesting, it's, it's kind of along the same lines of these big macro trends. So if you look at where people are congregating, especially in sort of net population migration areas, so Florida, Arizona, this kind of the sun belt, property management companies are a pretty interesting space as a thesis. And this is something that we've, we've looked at quite a few of these. These very sticky relationships. So when you have a homeowners association, you know, who runs that? You get into weird neighbor conflicts. You get into like, whose kid can go to the pool at what time? And you know, they were there afterwards and there were beer bottles left. I think there's a lot of like, maintenance of common space in neighborhoods. And so I think that, you know, if you look at these, these trends, more people are congregating in neighborhoods,

• 17:45Speaker 03

  more people are trying to kind of form almost like little communities by themselves. And so I think, I think HOAs and property management's got a pretty interesting space. And again, it's kind of a tangent to kind of the other one. I just think that that is a macro trend. Those are such big forces. They're sort of underlying everything. And in many ways, you know, here, you know, we're recording this in New York, you know, this is just a different world than what I swim in most of the time. And I think that a lot of times, people in big cities really just don't understand how the world works outside of big cities.

• 18:16Patrick O'Shaughnessy?

  True story.

• 18:17Speaker 03

  And by the way, and the reverse is also true. I mean, I think that most people who don't live in big cities kind of look at it as like, why in the world would anybody live there? And I think there's really great reasons to live in big cities and really great reasons not to, but they function like, life is very different in big cities versus small towns, or even, you know, even outside of the major metros. And so a lot of these trends that you'll see, am I bullish on property management services in big cities? No, but for different reasons. And I think that's where if you get into the sort of the nuances, the different things, depending on what your investment style is and where you want to spend your time, I think a lot of that also dictates.

• 18:52Patrick O'Shaughnessy?

  So what is that difference? So why the negative relative view on management in the city versus?

• 18:57Speaker 03

  Yeah, well, so it's a density issue. So, so when you think about property management and like, how hard it is to manage a property, if it's easy to walk to, you can have one person managing a lot more. So when you get into the logistics of property management, let's say in like, an area like Phoenix, you'll have these communities that are 20 miles out into the middle of nowhere, and you'll have like, 1,500 homes in the middle of nowhere. And that's an incredible HOA to run. You're not going to put a full-time person there, but you're going to have like, a part-time person, a lot of different people going there versus in Manhattan, you could take two city blocks and probably have, it's completely different dynamics going on in those. So from a kind of logistics, from a complication, from a personnel staffing, availability of labor, it just functions very, very differently.

• 19:41Patrick O'Shaughnessy?

  Let's go to some of these levers. So I'm intentionally going to choose a few things that in our public market quantitative work are not all that relevant, meaning these variables are

• 19:52Patrick O'Shaughnessy?

  Nearly as predictive of future results or returns to investors. Now, obviously, this price gets tangled up in this in this mix and is really important, but we tend to ignore them. They're sort of blind spots for most quants because there's just not good evidence that they matter when selecting stocks. But my guess is that they do matter to you. So the first one would be profit margins. So we can talk about gross, operating, net. How do you think about profit margins when looking at a business? Is it relative to industry peers? Is it some overall picture? Does that matter in your evaluation process?

• 20:22Speaker 03

  It matters. I think that each one of these that we'll probably talk about is is a factor that you have to consider, that you want to paint a picture with that factor. So you can't look at each individual factor and say, I'm going to draw a conclusion in every situation from higher profit margins or lower profit margins. How those factors interact with one another helps tell the story of how defensible is the business and why is it defensible? And a lot of times, by the way, when you look at these, they're not defensible. The defense is basically the goodwill of the owner, the relationships of the owner. And so when we look at profit margins, higher profit margins, obviously, connotes some things going on that allows for more money to be made on each transaction than you would expect on the higher end. And sometimes that can just signal cyclicality.

• 21:07Speaker 03

  So if you think about it, a lot of these blue collar, construction-related, building products-type companies, I mean, they'll have almost no margin in downtimes, when everyone's just hungry and willing to do whatever just to keep people busy. And then in uptimes, I mean, they will just have enormous margins. Well, you can't look at top-of-cycle margins and say, well, that's normal. So we're going to be able to maintain 30%. There's no way. Because then you look at the bottom and you say, well, wait a minute. What happened to your margins when when things dip a little bit? It's like, well, we really needed to keep our guys busy. We needed to work. So we're willing to do anything. So I think that you've got to look at margin compression and expansion over the life cycle of the business. You also, I mean, even non-cyclicality trends. You'll see some businesses that the margins are just naturally compressing.

• 21:52Speaker 03

  When I think about this, I think of like the printing industry. So the printing business, we've looked at a ton of different printing operations. And on the surface, they look incredibly profitable and attractive. Other than the fact you have to constantly be dumping money back in to keep up with your competitors. And people are just getting more and more savvy about how much things cost to print and printing overseas and how you, you know, all those dynamics. So if you look at an industry, you've got continual heavy reinvestment for the latest technology, new techniques, kind of the Red Queen effect, if you want to call it that amongst competitors. And you have decreasing margins and decreasing margins in up times. So it's a really dangerous, I mean, I think that's an industry where we'd be happy to get into it if the right opportunity presented itself.

• 22:36Speaker 03

  But we're very cautious whenever we see those types of trends. When you see a business that has quite low margins, so I would say under 10%, so let's kind of like put numbers around it. So under 10% being gross margins, under 10% gross margins and sort of above 30% or above 40%.

• 22:52Patrick O'Shaughnessy?

  Would be very high.

• 22:53Speaker 03

  Industry would be very high, high margins. If you see something that has very low margins, the question you have to ask yourself is, is there a scale advantage that they have? And is there a consistency of the work that allows that business to still earn really good returns on invested capital? But at just happens to be at massive scale with low margins. So typically you get high volume, lower margin, lower volume, higher margin. It's very hard to get high volume, high margin businesses. So there's nothing wrong from our perspective with buying a business that is lower margin at high volume. There is usually some defensibility around that for some reason. Again, that doesn't tell you anything. So you can't independently, it's just one piece of information that you kind of have to work. How does it interact with the other, the other cofactors?

• 23:36Patrick O'Shaughnessy?

  You mentioned cyclicality and this is something that I always enjoy when we talk and you give me surprising answers. And this was one of the early surprises, you know, a year ago or a year and a half ago. And we were talking about business specifically around the pool construction business, which obviously is a hyper cyclical business. And you had some interesting points about how you think about cyclicality. Most people, their knee jerk reaction, I think, would be to avoid hyper cyclical businesses because they're difficult. And, you know, you need to manage a cycle better, but I think you have a bit of a different viewpoint on this. So can you talk about how you think about the relative attractiveness of a hyper cyclical versus a very steady business?

• 24:10Speaker 03

  Well, so I think cyclicality is really, really dangerous if you apply a traditional private equity model to it. So I think that's the reason why in a vacuum cyclicality is not a bad thing. So how is like a normal completely, it makes sense, right? I mean, if you think about like, the whole world has cyclicality in it. People's life cycles, we have seasons of weather. Cyclical is a normal, ordinary part of life and a normal and ordinary part of the economy and businesses. So you have sort of micro cyclicality amongst a business, kind of a life cycle of a business. You can somehow sometimes avoid that cyclicality through certain techniques, but there's a sort of, you know, sort of normal arc of a business.

• 24:49Speaker 03

  And then you have the economic cycles, which by the way, affect micro smaller businesses differently than they affect macro businesses. And then obviously the trading of the underlying equity of those is sort of an amplification of that cyclicality. So there's a lot of different sort of meta layers on top of cyclicality, but in and of itself cyclicality is not a bad thing. It just presents different opportunities. So if you have a non cyclical business, yes, it's incredibly, or even a counter cyclical business incredibly profitable all the time. You're just going to invite a ton of competitors and over time, I mean, it's just going to be brutal to maintain that. In low professionalism, so you got sort of another factor is professionalism. Like what's, what's the standard level of professionalism amongst the businesses?

• 25:33Speaker 03

  And what's the type of person that's naturally attracted to that type of industry? And when you pair up low professionalism, which again tends to be more blue collar, more dirty jobs, that type of stuff. With high cyclicality, you get an incredible washout effect. So if you look at most construction related or highly cyclical businesses, the turnover rate over a full cycle is astounding. You basically get very few players that endure a full cycle. And what happens is people go out of business, people join other firms, new firms are created. Like it's just this, this ongoing renewal effect that occurs. But as an owner of a business, if you plan for cyclicality, so how do you plan for cyclicality? Well, you just don't put a bunch of debt on the business.

• 26:17Speaker 03

  You keep a really healthy sort of under levered balance sheet. And it shouldn't surprise you when the business has a downturn, shouldn't be like. Oh gosh, what are we going to do now? Well, we know this was coming. So what's the game plan now? So we have a game plan for when the economy down cycles. And we have a game plan for when the economy is going great. And you're sort of, you've got to play the playbook on both directions. But on the down cycle, you entrench, you try to maintain, you build an organization that you try to have low operational leverage. This is an interesting, from a business model perspective, you try to maintain, let me back up. In most highly cyclical businesses, there's a tendency to try to grab as much margin as you possibly can at every turn.

• 27:00Speaker 03

  So this means you try to vertically integrate when times are good, all the way down the stack. And you can kind of get attractive multiples to do like tiny little acquisitions. You, you know, sort of buy teams to come on board. You're doing the work yourself. Now, what happens when things reverse? Well, the operational leverage works against you and you go deeply into losses and you sort of nuke the entire organization, has a sort of catastrophic effect. So we think a lot about business model in terms of how do we diversify risk, make less money in each individual year, but survive full cycles? And then be the buyer of choice in a down cycle. So you get aggressive when everyone else is getting passive or scared. And this isn't anything radical. I mean, this has been written about in sort of the public markets investing.

• 27:44Speaker 03

  It's just applying it to a very straightforward approach in the private market. So when we think about highly cyclical businesses, we think about underlevering them. So not just not putting a lot of leverage on them, but actually maintaining really strong balance sheets, keeping a lot of working capital in these businesses, which again, from an investor perspective, you're thinking to yourself, well, golly, that means I get less cash out, that mean, you know, but no, you've got to think long term. You've got to think about how these businesses are going to react when everyone else doesn't have any cash and you're sitting on cash. Well, now you can be the mosquito with the nudist colony.

• 28:15Patrick O'Shaughnessy?

  Sure.

• 28:16Speaker 03

  And go nuts.

• 28:16Patrick O'Shaughnessy?

  Yeah. What's your favorite example of a counter cyclical business that you've looked at?

• 28:20Speaker 03

  Well, like fast food is an interesting business in and of itself. Fast food has a, when people have less money, they tend to also be stressed out and have less time. So you have this interesting weird effect where it's like you have less time to make food. Obviously, everyone still has to eat and you have less money to sort of eat out. So where do you naturally, you get this big upending trend in the bottom end of the restaurant market? We've looked at a number of sort of fast food or fast casual chains in the past. We're not going to buy one, you know, we have a kind of a predisposition against restaurants or just brutally difficult industry. But in the lower end in the fast food market, you can actually standardize to where it looks more like a manufacturing company than it does a food company. And I think that's where we have looked at those. We obviously haven't pulled the trigger on any of those.

• 29:03Patrick O'Shaughnessy?

  Yeah, fascinating. What about assets? So tangible versus intangible specifically, we've just written a lot about this and the global trend is towards intangible assets. More investment in intangible assets than in intangible in some cases, like in the United States. Although some places like Italy still have the opposite. How do you think about that? Do you care about how asset rich or asset light the business is? My guess is that like your other answers, it all is interdependent. But any thoughts on asset light businesses or asset heavy as you think about evaluating one?

• 29:34Speaker 03

  Yeah, it's a great question. So, so the way we think about it is it tells you something about the business. So if it's, if it's very asset heavy, that means there's usually these assets are going to be in depletion mode. And you're going to have to redeploy capital back into the business to maintain it. It's interesting from, from a purchase standpoint, it does provide this weird dynamic though, where you have a backstop in liquidation value with a lot of these heavy asset businesses. So if I buy a business just for round numbers that has $7 million liquidation value of hard assets and I buy it for $10 million. Well, I now know that I'm really putting $3 million at risk. Now, the bad part is, let's say we're buying it for 10 million. It's doing $2 million of just roughly two, two and a half million of, of earnings, you know, maybe of EBITDA.

• 30:17Speaker 03

  But you're taking that two and a half million of EBITDA and you're rolling it into a million dollars of reinvestment in the business. Well, now that looks like a pretty crappy return. So you've got this weird dynamic where you've got to look at the return on incremental return on invested capital. How much is sort of just to even tread water, how much do you need to redeploy? And then you look at growth. I mean, growth in a business like that, assuming you have to, to maintain those type of expenditures. I mean, it's just Really expensive and it drains cash to grow the business. We don't like to get into businesses like that. We'd like to get into businesses that throw off a lot of cash and have good uses, but really can't even come close to consuming all the cash that they're throwing off. And a lot of it depends on business model again. So going back to sort of the other factors, a lot of it,

• 31:02Speaker 03

  this is where you get the interplay between profit margins, asset intensity, you know, all these different things that are all the covariants in them. And it again, just paints a picture. So if you, if you paint a picture of a, an asset light, maybe sales and logistics organization in the, like a construction business. So this would be as an example, a contractor. So let's just take a, just a general contractor on, you know, multifamily housing, for instance, right? As an example. So really, if you look at the different functions of that and you sort of break it down, you've got the sales and marketing, you know, how do you work with developers? So let's say that, you know, the developers are coming to you and saying, okay, we want to go and develop this piece, piece of land that we have. So you've got to generate the lead. You've got to sell them on why you're the best choice.

• 31:45Speaker 03

  You've got to price it, all that stuff. And then your job is to functionally deliver these housing units to them at a pre-agreed upon price and a pre-agreed upon time. Now, how do you do that? Is so much to do with the business model. So there's really two paths to take and there's a, there's an in-between you can take, but really there's two dominant paths. One is the complete asset light path where you say, okay, we're going to generate that lead. We're going to sell the developer and then we're going to sub out every bit of the work. So we're just going to do the logistics. Well, then when it throws off cash, what do you do with that cash? Cause I mean, literally, Can't plow it back. You can't plow it back into the business. There's nowhere to put it. I mean, maybe you can open up other sales offices, but that's not even going to take up most of your cash flow. So you just have all this free cash flow, which is a great problem to have.

• 32:27Speaker 03

  But here's the, the other path, which gets sexy in, in, in an up cycle. So the other path is we're going to do all the work ourselves. So we're going to have construction crews. We're going to buy concrete mixers. We're going to do, I mean, we're doing the full deal. We'll do the rebar. We'll do the framing. We'll, we'll, we'll hire the painters. Well, I mean, you can vertically integrate, I mean, up and down the stack in 10,000 different ways. And the great part is in an upmarket, you make a crap ton of money. I mean, it makes, it is eye popping. We looked at a business recently that three years ago, lost $4 million in a year. And this year will, will clear about 22 million in free cash flow with this business model. Very interesting. And when you think about it, it makes sense at the time because you're like, well, we want to grab more margin.

• 33:12Speaker 03

  We want to be able to do better, you know, we want to grow the company. But the issue is then you start getting into, well, now you've got to buy a fleet of trucks. Well, now you've got to buy all this equipment. Now you've got to buy all the specialty. So, so what happens when the work dries up? I mean, you've got this big downside risk, but then you've also got the capital intensity dramatically increases. So maybe on that 22 million of free cash flow, you've got to take six or seven of that and plow it back into buying more stuff. Well, now you've completely altered your balance sheet. You completely altered your return on invested capital. So it's a very, it's like all these different things all interact with one another. And it's not like a straight line, like you should do this or do that. I mean, if you think the economy is going to go up for the next 10 years and you can build an empire, bring all these captives in-house. Yeah, it makes complete sense.

• 33:57Speaker 03

  If you think the economy is maybe going to cycle in the next two or three years, it's basically suicide to do that. So it's just, it's all a bet on the future and, and you know, everything that comes with opportunity cost. It's really hard to look at somebody's earnings stream today in a snapshot in time and understand the risk they're tolerating for that income stream. So we always try to look at it as over a full cycle, what do we anticipate to make? And at what risk tolerance are we, are we making that? And we just frankly, the way we kind of operate is we'd rather have, if we're going to have a highly cyclical type industry, we'd rather have very low capital intensity business. And we'd rather under lever it and not put debt on it. And sort of over time, you're just, it's really hard to harm a good entrenched, great reputation,

• 34:40Speaker 03

  good relationship business that's highly cyclical. If you don't put a bunch of debt on it and you don't have a highly levered balance sheet, it's just, I mean, it's just almost impossible.

• 34:47Patrick O'Shaughnessy?

  Another really interesting input that you, I don't think you and I have ever talked about, but it's an interesting one in the context of kind of where we are in the cycle and what's gone on in the country, which is labor costs and wage inflation. So everyone knows that's kind of read the history that for a very long time, adjusted for inflation, wages really haven't gone anywhere. And I think there are early indications that that is changing, that there is wage inflation, labor is more expensive, unemployment's at, you know, extreme lows in like every category that you look at. How do you think about that as an input on the cost side of a business? And is something you think about when kind of underwriting the future of some of the companies that you're looking at?

• 35:24Speaker 03

  Yeah, well, the first thing we think about is transfer pricing power. So we always want to understand, things are going to change. Inputs are always going to change. So the price of commodities are always going to change, whatever the inputs are in that business. And obviously, labor and the availability of skilled labor is an input into the business. The first question we want to ask is, how immune are we to changes and fluctuations in that? So when it goes down, do our customers demand that we pass that savings along to them? And when it goes up, are we able easily to pass that along to them? Or do we have to eat it both ways? Meaning, sometimes it's great if we think that the input costs are going to dramatically go down over time and our customers are not going to know the difference. Of course, like, that's a beautiful scenario.

• 36:07Speaker 03

  Your margins are just dramatically expanding in sort of natural tailwind. That doesn't usually happen. So like, usually where you get it is on the other end of things, which is, you know, you get a lot of demand for labor. I think that especially in unattractive, like sort of surface level, unattractive, things that don't make you impressive at a bar, we see these, we see those trades really trending older. And there's just not a lot of new entrants into, you know, commercial painting businesses, an example. If you hire a commercial painting company, the person who's going to show up or the team that's going to show up to actually do the painting is going to be older. There's just not a lot of young talent flooding into and saying, you know, I could go do X, Y, or Z, and I'm going to choose to be a commercial painter.

• 36:50Speaker 03

  Usually people back into it through sort of a family trade or a relationship, or frankly, because they have no other choice. And then they fall into this and they say, well, holy cow, I can make a lot more money being a commercial painter than I could being a social media manager. Right? I mean, you know, as an example, right? But being a social media manager is more impressive. Maybe it's more impressive. I don't know. At a bar, I haven't been to a bar in probably a long time. But, but you know what I'm saying? Like when you tell somebody at a bar that you're, you know, I'm a painter. It just kind of connotes like, okay, well, it's not somebody who's going to be somebody I'm super excited about talking to. There's a lot of signaling going on. We do see the single biggest challenge that we see every single business in anything in the trades is just labor, availability of skilled labor, skilled labor, trained skilled

• 37:34Speaker 03

  labor, and it is so hard to compete. There's just not enough people out there. And so you have firms doing all kinds of crazy, like signing bonuses. You have like trying to do basically Aqua hires in, in that area of the market. Some really like nutty stuff that's going on. And some of it's being able to be passed along to the customers. I mean, if you're building a building and everyone's telling you it's going to be X, like you have just have no choice. Like you, your choice is to not build the building. Right? And so you see this as it is trickling through. But I think from an owner of a business standpoint, we always just want to know what are the inputs and how much can we pass that along in terms of price increases through to the customers?

• 38:11Patrick O'Shaughnessy?

  Why do you like pet crematoriums so much?

• 38:15Speaker 03

  This is coming from our, from our Omaha hangout. I think you, somebody asked me, they were like, what's the single best business you've ever seen? And I said, I don't know, pet crematoriums are really up there. I mean, the short version is you need a storefront and oven. And the longer answer is you have some major psychology that comes with it where anytime you deal with a wedding or a funeral, like the price of anything, like a flowers, like flower arrangement, it basically like triples. And you're running a pet crematorium, the, the whole pitch is this pet's been a part of your life for 10, 12 years and your kids grew up with the pet. Are you really just going to bury Fluffy out back? You're not going to have any closure? Your kids are going to be screwed up for life. You're going to be paying for it in, in psychology, your psychiatry. No, I mean, you can, you can get people and then obviously the upsell and, and then you

• 38:58Speaker 03

  get into these, these strange dynamics where if you, do you care that your, your lifelong pet gets put in the oven with five other pets? Or do you want the oven to only fire your pet? Do you want mixed ashes or not mixed ashes? Do you, I mean, do you know the alternative is? One of these places that we talked to at one point said, you know, what happens to, at veterinarians? Like it varies, but like a 110 pound dog, like you have to do something with that. And so, you know, there's only so many things you can do with that dog and none of them are pretty. And so, you know, there's a lot of like closure cleanliness. So margins are enormous and the startup costs are storefront and oven.

• 39:35Patrick O'Shaughnessy?

  Pretty amazing how many ways there are to make money.

• 39:37Speaker 03

  I love it. I love it. Yeah. Yeah. That's, that's my favorite part of my job is we get to see the most interesting business models and, and just really interesting people that we get to, that we get to work with.

• 39:47Patrick O'Shaughnessy?

  So let's talk a little bit about briefly, the history of the permanent equity fund itself and sort of the, the early advantages that you're seeing changing from really just doing what you do with your own capital to having a significantly larger committed pool of equity capital. I'm always interested by how that affects everything else that you do. And it's something that's obviously relevant for anyone out there that's beginning something on their own and, and potentially scaling that up. So maybe from your perspective, tell kind of the story and your thinking around moving from one to the other and sort of the early observations or returns on that decision.

• 40:24Speaker 03

  So I think that to maybe start at the end first, the big difference we've seen is access to people. We have some incredible investors. I mean, obviously you and your family are one of them in full disclosure. We brought on just an all-star cast of investors that are just, like I was terrified to be completely honest. I mean, maybe I shouldn't be telling you this at this point, but I mean, I, I think even at one point you talked me off the ledge. I remember, I remember.

• 40:45Patrick O'Shaughnessy?

  More than one.

• 40:46Speaker 03

  Yeah, probably more than once. I was like, I can't do this. I don't want to do this. I'm terrified that I'm going to, I'm going to be dealing with, you know, sort of a pool of investors that are hassling me all the time and second guessing and all the stuff. And honestly, I have found it so far. I mean, it's only, we closed in December, right? So it hasn't been that long, but it's been a Wonderful value add to be able to call incredibly smart, thoughtful people who have a vested interest in my success and say, hey, I want to run something by you. This may sound a little nutty. I think you probably get one of those calls from me about, you know, a week, probably one a week or at least once every two weeks. And you're always like, sure, let's hop on the phone and chat about it. And having that has been unexpectedly positive, I would say. But that all depends on who you can get to invest. I mean, I think we had a selection bias. You know,

• 41:30Speaker 03

  when you, when you're starting pitches, plan on never getting your capital back, you're going to attract a unusual type of person who thinks in a different way than the norm. But that's been great. I think the other really big advantage that we didn't anticipate is what it means to be able to write a very large equity check for a relatively small size business. So we are one of the only, I mean, when I say one of the only, we might be the only person operating in our area or group in our area of the market that can write a $20 million equity check on a smaller business. We have just so much more flexibility in how we can structure deals. And it's just all

• 42:12Speaker 03

  about what does the seller need and what's optimal for them. I mean, when we think about adventures, we think about it as we have a client. And no offense, Patrick, you're not the client, right? Our LPs, our investors are not the client, right? The investors will benefit from this, but the client is the seller. We think about everything from the seller's eyes. How do we optimize for them contacting us? Because I mean, almost all of our deal flow, virtually all of our deal flows inbound at this point. So we want to optimize for getting a selection bias on that side. We want to repel the wrong people and attract the right people. We optimize the negotiation process for the sellers. We do a lot of things that inconvenience us that is great for the seller. We do a lot of things in due diligence very differently than how a

• 42:55Speaker 03

  traditional private equity firm does due diligence. And a lot to wrap it back to the fund, a lot of the fund documents are, you know, express that. And when we talk about the flexibility that we have to be able to do what we do. And so we optimize everything from a seller's perspective. And so when we look at a seller who I'm on a site visit in New York right now, that's why we're Getting together, I'm flying to DC later today, doing another site visit and then flying to Louisville, Kentucky and doing another site visit after that. I mean, we are always looking at it as how do we make things work really, really well for the sellers and money at closes is in structure is a big part of that. These are businesses that by definition, if they've survived, you know, 20, 30, 40 years, or maybe, I mean, one of the deals we're working on now has been around for 110 years. These are companies that don't carry leverage. They just don't like functionally,

• 43:40Speaker 03

  they just don't carry debt. Everything's paid for in cash. And so you take a company that has that in their DNA and everyone else is telling them, well, we're going to buy you, we're going to lever you up, we're going to go through this like almost immediate sale process, all that. That's what everyone else is doing. Or we come to them, we say, we're not going to do preferred equity. We're not going to put senior debt and mezz debt. We're not going to go and flip you. We're going to create one asset class or one equity class. We're going to pay you all cash and equity. We're going to have a seller note for part of it, but you carry, keep things incredibly simple. And they're like, oh, well, this feels like a family is buying the business, not a fund. And it's like, yes, like we are functionally able to provide capital that is family capital. And then all of our capital providers, all of our LPs are families, right? I mean, there's no

• 44:25Speaker 03

  institutional investors. That's probably a whole separate reason why both selected on our side and on their side. But, you know, it just allows us to have much greater flexibility and do whatever's in the best interest of the seller, which then in turn is in our best interest.

• 44:37Patrick O'Shaughnessy?

  One of the most interesting things I learned through the process and thinking through this with you is just the return on flexibility. So the same customization, I guess, that you're willing to do for your sellers to make their lives easier, that goes up the stack. And so if you were investing out of a, you know, two and 20, 10 year life, five year investment period, you know, X year harvest, private equity fund, that neuters the advantage that you have with the seller. And so just this importance, increasing importance, I think, in capital markets to think about structure differently as a huge advantage. But also, I mean, we could both tell long stories about the inertia is difficult to overcome. So when you bring a new structure to investors,

• 45:18Patrick O'Shaughnessy?

  like it's an arduous process. Like that's, that's probably the thing I learned most in that process.

• 45:23Speaker 03

  Yeah, the process, I don't know, I don't know what I expected because I'd never done it before. I think there's always a bias that anything you haven't done before seems easier than it's going to be.

• 45:32Patrick O'Shaughnessy?

  Right.

• 45:33Speaker 03

  Even if you assume it's going to be harder than you think it initially will.

• 45:36Patrick O'Shaughnessy?

  It's always harder.

• 45:36Speaker 03

  It's always harder than you even think it could be hard. And I think one of the unexpected things about raising the capital was just that we were doing something different. And anytime you're doing something different, the only people that can participate are people that don't have career risk.

• 45:50Patrick O'Shaughnessy?

  Yep.

• 45:50Speaker 03

  So anytime you introduce the factor of career risk into the decision-making process, you have to do the norm. Because it's a divergent system. So if you invest in a divergent system or you participate, you know, and sort of even outside of investing, and it goes wrong, you have massive downside risk for your career personally, separate from the organization. Could be the right, right decision. So we're going to assume it was the right decision. It was probabilistically a great bet, but it goes wrong and it looks different. You could get fired. If it goes right, you sort of don't have enough upside career-wise personally. And so this is, you know, principal agent problem. And I think we experienced that, you know, when you and I went and talked to some of these, whether it's endowments or even, even larger family offices where they're quote unquote professionalized.

• 46:35Patrick O'Shaughnessy?

  Sort of an intermediary layer, professional intermediary.

• 46:37Speaker 03

  Yeah, as soon as you add a professional layer, it really just became immediately unpalatable. Just the whole structure, they're like, well, I have so many like reasons why I can argue that you shouldn't do this. And if you come at it from that perspective, you're always going to find a reason not to do something. And so I think literally, I'm trying to, I'm trying to go through the investor list. Literally, the only people that invested the 50 million is all from people who are the decision makers and hold the capital. So there's no career risk to them.

• 47:04Patrick O'Shaughnessy?

  How do you think, looking forward, that this will continue to scale? So you mentioned the advantages of having this pool of capital, kind of being the only one without the traditional PE structure, but this amount of capital to deploy into these family-owned businesses. Let's say we're five years down the road or two years down the road and that capital's depleted. Do you think, and this is something we've talked a tremendous amount about, that this continues to scale better horizontally or vertically? Have you given any future thought to that idea?

• 47:31Speaker 03

  Yeah, so the plan is to continue to scale horizontally. So when we say horizontally and vertically, we probably need to define it, right? There's, there's basically two ways to grow an investment firm. You either start doing bigger and bigger deals as you accumulate capital and hopefully generate great returns. And that's sort of what Berkshire did. I mean, if you want to look at them as being the clearest example, they did smaller deals and they did bigger deals. And then they do mega deals. And now, I mean, I, I think that. Berkshire can't even probably do a deal under $2 billion now. It probably doesn't even like move the needle. I mean, they got what 100 billion or 110 billion in cash on hand. Yep. It's that anchor that unfortunately you gotta drag behind you. And I think the only alternative to that is you go wide instead of go sort of deep or, you know, go tall, depending on what way you want to look at it. And that's to continue to scale out and buy

• 48:13Speaker 03

  lots of, lots of companies as opposed to doing bigger deals. And so you deploy, instead of, you know, right now, Adventures is set up to maybe do two to three deals a year. In five years, hopefully, we're going to do 10 deals a year. That's arbitrary. Maybe it's six, maybe it's 15. I have no idea. Obviously, it depends on, everything starts with opportunities. So, you know, the way I think about building Adventures and the way we talk about as a team is, is we want to have the highest opportunity costs in the world and continue to build the opportunity costs at every turn. So, we, I don't think we're great investors from a like, like, we're not great at slicing and dicing. We're not great at, you know, making really tough decisions. Like, we just want no brainers. And, and we want to decide between really good

• 48:55Speaker 03

  opportunities and great opportunities. And if we, you know, the only way to get those types of opportunities is to have a ton of opportunities you look at and have good filtering mechanisms and selection bias that are all positively set up in your direction. So, continue to scale out means doing more deals of similar size. We will, from time to time, have deals, we have a deal right now that's a 17, $18 million earning company. That's a private company, family owned, and we're just the right cultural fit for them. And so they're, you know, they're coming directly to us and saying, "Look, we want to talk about this. We know we're a little bit on the big end for you all and, and, but, you know, could we figure out how to create

• 49:38Speaker 03

  a permanent equity structure around the sale of, of a portion of the company? They want to, you know, hold back, the family wants to hold back some of it and kind of continue on for the ride, but, but wants to take some chips off the table." I mean, if you've got- I mean, that's a lot of money. It's a lot of cash flow, but it's also a lot of equity. If all your assets are tied up in that company, I mean, there's a real fear, right? A concentration risk. And so, you know, the issue is right now, outside of us and maybe a handful of other investors, there's really just not a good mechanism to be able to liquidate part of a company and keep the same culture, keep this family attitude. And so, yeah, we will go up market. You know, we probably, unless it's bolt-ons, won't go down market.

• 50:21Speaker 03

  We really like kind of moving forward in that kind of three to seven, three to eight million in pre-tax earnings, and then we'll go up from there opportunistically. But we're not going to just move up into bigger and bigger deals as we have more capital just to, because we got to deploy it. I mean, one of the things that we told our investors was, you know, we may do five deals in one year or one deal in five years, and you got to be okay with that. And most people aren't. But that's, I mean, we're just, if we have the right deals at the right time, we want to do them. If we don't have the right deals and it's not the right time, we're not going to do them. That's simple.

• 50:52Speaker 04

  Hey, everyone. Patrick here again. To find more episodes of Invest Like the Best, go to investorfieldguide.com/podcast. If you're a book lover, you can also sign up for my book club at investorfieldguide.com/bookclub. After you sign up, you'll receive a full investor curriculum right away, and then three to four suggestions of new books every month. You can also follow me on Twitter, @Patrick_OShag, O-S-H-A-G. If you enjoy the show, please leave a quick review for us on iTunes, which will help more people discover Invest Like the Best. Thanks so much for listening.