In this recent interview with Value Investor Insight, Sequoia’s Arman Gokgol-Kline, Trevor Magyar, and Chase Sheridan discuss why long-term value investors fail. Here’s an excerpt from the interview:
Q: Is there a risk that the type of high-quality value investing you’ve long espoused becomes too popular and it’s harder to distinguish yourselves as investors?
A: It is probably true that focusing on quality, and even more specifically the combination of quality and some amount of growth, has become something like accepted wisdom for value investors.
We have Warren Buffett to credit for that, although I’d point out that he was practicing it and preaching it for decades before the world fully came around to the idea. So just knowing that is not enough.
You have to take that and build a process and philosophy around it that is different and better in rooting out companies that can actually compound value at high rates over long periods.
We also believe actually investing as a long-term business owner is an advantage that isn’t as widely practiced. If you look at the number of investment firms that truly hold over a long period of time – and that outperform as a result – there aren’t that many.
It’s one thing to say you care about long-term value and another to actually behave as a long-term business owner. None of this is easy, but it’s never been easy. That’s what makes it interesting.
You can read the entire interview here:
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