Invest Like The Best
Episode 135 The Three Legged Stool
Invest Like The Best

Episode 135: The Three Legged Stool

Invest Like The Best

Episode 135

The Three Legged Stool

Chuck Akre is the founder of Akre Capital Management. We cover Chuck's investing philosophy, his Three Legged Stool concept for evaluating companies, and recent businesses that he has invested in.

[00:01:06] – (First Question) – Advantage of being in Middleburg, Virginia

[00:02:11] – What a day looks like for Chuck

[00:03:06] – Why imagination is more important than knowledge

[00:03:38] – Difference between curiosity and imagination

[00:04:38] – The origins of the Nirvana Three-Legged Stool concept

[00:10:14] – First leg of the stool, extraordinary business and ROE’s with a focus on Bandag

[00:14:36] – How his evaluations of value has changed over the last 10-15 years

[00:16:10] – A look at recent businesses that he’s bought and why they are interesting

[00:19:56] – Why they keep things simple

[00:21:35] – Second leg of the stool, the people involved and characteristics of managers he has invested in

[00:23:20] – Role of capital allocation in the people he focuses on

[00:29:34] – Third leg of the stool, reinvestment

[00:21:09] – How does he think about diversifying across an investment area

[00:33:32] – Great businesses wrapped in a bad balance sheet

[00:37:35] – What would cause him to sell

[00:38:52] – What does he look for in people

[00:43:27] – How curiosity has impacted his interest in land conservation

[00:43:51] – Advice for investors, especially younger ones

[00:46:14] – Kindest thing anyone has done for him

The Three Legged Stool

Introduction

Patrick
My guess today is Chuck Akre, a now widely famous investor, who founded Akre Capital Management in 1989, which now manages approximately $10 billion. We discuss his investing styles and his three-legged stool for evaluating companies. Please enjoy this great conversation.

So given that, Chuck, this is my first time here in Middelburg, I thought it would be a fun place to start with, the place where we're sitting. You've talked about the one traffic light town, as maybe an advantage. Something very different from the typical investor. Talk about Middelburg, why you're here and what you love about it?

Chuck
We're here because of, in effect, quality of life issues and I happen to be a person who works well without a lot of commotion around. I know lots of people in the business who love commotion and I've worked with most of them, but the low level of activity around here is just helpful for us, being able to sit there with our doors open and not be disturbed by outside events. Then as it relates to let's say Middelburg versus Central Park South, if my office were there, I'd have a thousand friends who are very bright and very interesting and I would be distracted. I'd become curious and engage in their though process and it would distract me from what it is that I do well.

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