YouSaid · the spoken record

Chuck Davis

lines on the record: 73
first: 2021-08-09
most recent: 2021-08-09
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Not everybody got all the gifts and benefits that you got and I got. And that's not because of anything but dumb luck on our part and to not appreciate that and to not give back and to not really also be empathetic to people that don't have that. I wish I'd been more empathetic and understanding to all that.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it's living in the moment, it's just enjoying. Benefits of everything that you've had in life. When you get sick, when you get a headache, when you don't feel well, you promise yourself, when I'm feeling fine again, I'm going to appreciate it. Then you feel fine and you don't appreciate it. And you feel fine for the next four months and you just take it for granted. And then you get... Cold or a headache or something happens to you, and then you go back into that boy when I got out of this little thing, I'm going to appreciate feeling good again. So I just think it's all about. Really living in the moment and loving and appreciating”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“They loved us unconditionally, no matter what. And there's something about having parents that love you unconditionally and aren't saying, oh, you didn't get an A, so I'm holding back my love for you, or you got cut from that team, or you didn't do this or that right, that just wasn't the way we were brought up. We were brought up by the most loving mother and a very demanding father, but two people that were with you through thick and thin. By the way, my siblings were with me through thick and thin. I've always tried to be there for them. And same with my family today. I just think unconditional love is an unquantifiable gift that you can give to another human being.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“One of four kids, I would say Unconditional love They loved us through thick and thin and man we made some bonehead decisions along the way I would take more than 25% of the blame for that of the four of us”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“I used to be, but I'm still a delayed gratification person because we all know once you get there, that's not that gratifying. The gratification is the process along the way. And it's similar to running a marathon where you really have to enjoy the training and the running in the rain and all the things you have to go through, not just the ah, I'm on the finish line. I'd say that's the biggest mistake that I have made and that I continue to make is just not living in the moment, not appreciating just how fortunate we all are to work with each other and have the privileges we all have.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“How much time have you got? I would say as a general comment to that, because I could give you a lot of specific deal mistakes and decision mistakes, is I really believe That happiness and being comfortable with who you are and where you are is the key to life. And you want to be a journey person, not a destiny person. And I've had a tendency over the years to say, you know, when I get that deal done next month, I'm going to be ecstatic. When we raise that fund in three months, I'm going to be ecstatic. When we close this, when we do that and always waiting for the satisfaction of the deal ahead, as opposed to, wow, look at where we are right now. Be happy with that. Enjoy the process of getting that deal done. Don't wait. Don't hold back gratification, happiness, satisfaction for the moment that it transacts. Enjoy it along the way. I am much better at that.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“Wow, I could list 50 people that went out of their way to help me. If you had to say two, I would say without a doubt my father, for reasons I could take you through way beyond what we talked about before. And I'd say the other one, Steve Friedman, who was a role model at Goldman Sachs and has been a tremendous partner and friend to me, and I've now worked with him for 46 years. And I'd have to say he's had more influence on my business career than anyone with the exception of my father.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“Speaking your mind, do your homework, have a well thought out opinion, or don't get in over your head, but do speak your mind.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“We're big at stone point on everyone speaking their mind, and we do not want people to be what I would call head bobbers. You look and see what the senior people want, where they're leaning, and you bob your head that way. We want people that make an independent judgment and aren't afraid to disagree even with the most senior people here who are hard to disagree with because they're hard-headed and stubborn and have a view. And it's usually something they feel pretty strongly about. We like to argue. We try to disagree without being disagreeable. And we want young people to speak up. And we want them to tell us what they think. And we want them to give us their vibe check on a deal, one to ten. Would you do this deal or not? I'd say the biggest pet peeve around here is feel comfortable.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“I just think life is full of ups and downs and challenges, but people that wake up in the morning and say the glass is half full are just fortunate people. I just really. Feel badly for people that the glass is half empty and woe is and the joys of the people around you and make the most of it”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's also evolved, I would say, now I am very much a mindfulness person. I don't think that's meditation in a traditional sense, but I have this thing I go through where I just take time for myself and it's usually 20 or 30 minutes where I go someplace really quiet and I tune out and I just let my mind kind of relax and wander and I try to breathe slowly and kind of see what comes out of that and I find that's really invigorating. I'm energized by it and I usually come out of that with something going on in my head that wasn't there before and I can't really quantify it. I don't think of it as, okay, let's come up with a great idea. It's just the opposite. Cleanse your mind, empty your head, let it flow. And I find that to be a very valuable and relaxing thing to do.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“I just love athletics and sports and sweating, perspiring. So that used to be running marathons and now it's maybe going for a nice walk. But whatever the activity is, whether it's skiing or golf or tennis or jogging or walking or going out on a boat and maybe water skiing and feeling the breeze and the air, I find that to be really invigorating. And one difficult thing about working as intensely as you do is although you can walk around and get up from your chair, it's not a very physically taxing business. So I try to get as much exercise as I can and I really enjoy that because I just feel I don't have the runners high. And I come back a little slower than I used to, but it's just great. To feel your heart pounding and breathing heavily.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“Be here forever. Well, the firm will continue to share ownership, responsibility, leadership, management, and everyone will get challenged and given the opportunity to be as successful as their skills and their talents allow them to be.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“While we're flattered anytime anybody wants to talk to us, having said that, the team here really is happy with themselves and with each other. And we constantly discuss this type of thing and we really want to control our own destiny. And we don't want other people at the table other than the people here that are evolving and moving up the ranks. And we are very carefully and thoughtfully bringing more and more people into the management, into the leadership, into the ownership of the firm, into the economic upside of the firm because we want this to be all of our firm, not just the senior people's firm. And that transition is challenging and takes time. So we're very hopeful that the People in this firm”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“Is built to last through generations and we are all very hopeful that this firm is going to succeed and be here 10, 20, 30, 40 years from now to do that we have to grow and to do that we have to give the opportunities to the 25 35 and 45 year olds that those of us that were here in the beginning have had”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“Our team has gotten bigger and kind of a straight line. We tend to handpick people right out of the Wall Street training programs and really invest heavily in them and they invest in us and they end up staying and becoming permanent members of our team. And the turnover here has been almost zero after the two year associate program. So in terms of ownership, responsibility, leadership, share of the carry, et cetera, we hope and expect that that's going to continue to grow and succeed. The bigger you get, the harder that is, the more people you have, the more it's difficult to be an individualistic firm where you really know and care deeply about every single person. But that's certainly the motive. This is, to me, a family and the stone point capital family really.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“Certainly since the spin out in O four oh five where we own the business and had complete control over our destiny for good or bad, every decision we've made has been made with the motive of what's in the best long-term interests of StonePoint and how do we bring in young people and give them the same opportunity that we have all had over the last 20 years. And as you know, that gets harder and harder. And at Goldman, there was always a view in the 70s and 80s and 90s, oh, I missed it. What a great record year. By the time I get there, it'll be gone. It'll be over. Well, it didn't end at Goldman. It just got better and better and better and better for years and years. We hope that StonePoint can continue to evolve and succeed. We have been growing linearly, so our funds have gotten bigger and kind of a straight line.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“Our floor and ran a great business, and then along came Charlie Munger and Warren Buffett, and hard to argue that Todd wasn't a great fit for them and they weren't a great fit for him. He's an extremely talented fellow.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“And when we found Todd, he in many ways was perfect because he had worked for the Florida Banking Department studying bank fraud in Florida with the FBI. So he knew the banking system and the regulatory process very well. He had worked at progressive, which I was and still am on the board of. So I met him. And he was in the pricing department and progressive is probably the most sophisticated insurance underwriting company in the world. So he was trained on insurance underwriting. He then studied value investing at Columbia Business School and he was working inside of a hedge fund. So he really, in many ways, was perfect for what we were looking for. He was 32 years old. He didn't have a brand. He does now. And so setting up his own.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“Todd Combs is a uniquely talented individual in many respects. He was Very well trained to be an investor, particularly in financial services, although at Berkshire Hathaway he's way broader than that. And we discovered back 20 plus years ago this process was building cumulative knowledge here and information, much of which we couldn't act on because we only had a private equity firm. So one sector would be massively overpriced, but they were publicly traded and we couldn't short them and couldn't act on that knowledge. Another company we thought was ready to triple in the next three or four or five years because of their position, but they were publicly traded, didn't want or need capital, and we couldn't invest in them. So we spent a few years and dozens of interviews looking for someone who could do in the public markets what we were doing in the private markets.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“A 20 foot pole vaulter in that sector, and he or she wants their own company with their own name and their own team and their own investment process. We don't sit on those investment committees by and large. We do help them any way they want us to help them. And that's been a very successful strategy. So now they're bringing us more really talented asset managers. And our funnel is very great for those deals. And it's a wonderful asset for the Trident funds to have in our toolkit.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“Blackstone, KKR, Goldman Sachs, whomever, and those are great platforms, and they can help you in a lot of ways. But if you want it to be your firm with your name on the door where you have meaningful ownership, we are a good partner because we'll help you with everything from office space to technology to compliance to getting a prime brokerage relationship, registering with the SEC, and raising money. And we'll own the firm with you. So we own between $15 and $85. I say we being the Trident funds and our LPs, between 15 and 85% of about 15 asset managers who are growing and succeeding, who have really special skills in that little area. And those businesses have been very successful, partly because the owner-operator is”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“Very tough to hang a shingle now and say hi, I'm Dinaker saying I'm Merrick Minich. Give me $5 billion. Those days are pretty numbered. There's very few people that can do that. There's lots of places to go, the big firms, where you can run that sleeve for them, but you're really working for”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a great question, and we love asset management and frankly, in 1998, when we joined Marsha McLennan, they owned and we owned Putnam, and Putnam had a preemptive right on any asset manager. So we really weren't able to do asset management deals until we spun out in 0405. Since then, we've done more than a dozen. And we're a great place for somebody who is really good at some asset investing capability. So when your Graham Goldsmith and you're really good at stressed and distressed debt and you're Nick Weber and you're really good at European real estate equity and you're Greg White and you're really good at first lien mortgage asset management fixed income. If you want to own your own business”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's the right thing to do, and the owner operators support that because they have so much skin in the game that they like the opportunity to have a monetization as well. But exits are tough for us. We would rather be Warren Buffett, who buys things forever, but our model is flawed in the sense that we can't own things forever.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“This is not meant to be a glib comment, but if this business succeeds, there'll be lots of exit alternatives. If this business does not succeed, all the things we tell you today about how wonderful the exit options will be are not going to be there. Obviously, we're very focused on what strategics want to buy right now. Private equity firms are very competitive with strategics. So businesses that are leverageable, people will put a lot more leverage often on businesses than we will. People often will adjust EBITDA in ways that are quite creative. So there's a lot of money out there and there's a lot of buying interest in private equity and in strategic land. So exits right now are pretty prevalent. We have a number of companies that we're selling right now that we would rather hold, but it's just the prices are so compelling. We just feel.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's something we have to control because these people just are the reason we're here, we're the reason we're successful. We live vicariously through their successes and their businesses and we love them. And saying goodbye is brutal. We tend to hold longer than most firms. We have moved firms from one fund to another, which is challenging, but our investors have been supportive of us doing that. We're very excited about the new technology of continuation funds and the like because at some point a company reaches a point where maybe you can't get a compounded return going forward and therefore you really owe it to your investors to do a monetization. But a lot of times these companies have a lot of legs left and we want to own them longer rather than shorter. But what we tell our investors when they ask us what's the exit strategy going in?”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's a toughie. One of the things you learn along the way about investing is don't fall in love. Don't be passionate. Don't lead with your heart. Lead with your brain. And I am definitely flawed in that.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's their company. We support them. And it doesn't matter that we are a majority owner. We report to them. We want to help them any way we can.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“Of synergies they tend to bring added management talent, customers, diversification. Those are great things to do. So our job is to help them any way we can. Sometimes we bring the tuck hunters and negotiate them and price them. Sometimes they do. We let them do whatever they want to do. We help them any way we can. We introduce them to customers. We help them with capital structure. We help them with hiring people. We try to be strategic sounding board. And again, it really depends on what they want or need. And if you asked every one of the 65 or 70 owner operators that were in business with today, I think you'd give you slightly different stories about what we do because we're not going into a company and saying this will be your comp plan. This is the way you'll work. This is the form you'll fill out every month. This is the people you'll use for A, B, and C.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“Knot houses of straw. We didn't want to be strong point capital. And if you look at the businesses that we've had the privilege of owning, they have done extraordinarily well, almost without exception, after we have moved on and the next buyer did really well because the management teams were very aligned with us. Let's build a real business here, a solid business, a solid platform. One of the formulas we've used successfully is if we have a good platform and if we got the best management team, we can tuck in smaller businesses and a lot of these fragmented spaces. So our companies have done three or four hundred tuck unders in the last three or four years. And they did 60 or 70 of them during COVID. And those tend to buy down your multiple. They tend to have a lot.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“Micromanage and really get involved in the day to day activities of the business. That's not really our model. And when we've made mistakes, and of the 150 deals we've done in over 20 years, we have made a handful of mistakes. We have a very low loss ratio because of the great owner operators we backed. Our job is to find them, convince them to let us be their partner, and then to help them any way we can, which sometimes means getting out of the way. So we have high touch investments. We have low touch investments. And you try to work that out ahead of time. And we try to help these companies grow and succeed. We want them waking up in the morning, thinking about how to buy, how to build, how to spend, how to grow, how to acquire, not how to cut costs, pay down debt and financial alchemy your way to success. We try to build houses of stone, hence the name point.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“Obviously, the first thing you do is try to work out what you're going to do if and when you partner up before you partner up. And again, having the opportunity to really know these folks ahead of time, hopefully you have an agreement before you get married and find out things that you wish you'd known ahead of time. So we're very aligned with them. We want them to have a lot of skin in the game. We want them to make a lot of money. We want them to be at risk with our investors. We will sit down with them either before or right after the closing and develop kind of a hundred day plan. We don't put operating executives in. We don't sit next to them and micromanage the business. If they are a 20-foot poleter, they don't want us or need us to do that. We have to be right that they're really good. We don't tend to replace management teams. We don't tend to.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“The fiscal and monetary policy of the government. At some point that ends and then what are you left with? So we're staying away from risk bearing, but we're doing a lot of work on it. We're meeting with the management teams. We're getting ready to set up and go after that market when it compels us to do so. In the meantime, we're doing a lot of free cash flow, high value added, service businesses backing 20 foot pole vaulters who have high retention rates, recurring revenue, high margins, and no real capital intensity and a lot of free cash flow.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“Slow twitch, muscle, multi-year, proactive outbound targeted search is so important. Now we're not doing a lot of bank deals now, but we are ready if and when the banking system needs capital and you're compelled and you're paid fairly for the risk to do that. So the answer to your question is it really depends on the cyclicality. We're not clairvoyant. We can't see around corners, but we do know when risks feel like they're getting underpriced. And right now people are going out the risk spectrum and the more risk you've taken the last few years, the better you've done at some point that's going to turn around. And right now most of the things you invest in that have asset intensity to them, you're not really being paid adequately for the risk you're taking. You're getting bailed out by this wonderful flow of funds coming out.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“We set up a bank with Mike. We bought a couple of banks to get charters quickly. We merged some businesses, built the company, and we did the same thing in Texas. And that bank ended up buying banks in Colorado. We did the same thing in California, and they ended up going to Arizona. We did the same thing in the Carolinas. They went to Virginia. So we did more bank deals than anyone after the crisis in the United States, having done none for the eight years before. So you have to be ready to pounce. And the only way to do that, I ran a lot of marathons. And I tell the team here, when the gun goes off at the start of the race, the race is basically over. What you did or didn't do the last six months is going to dictate what happens in the next two to four hours. So we have to be ready to take our sweats off and run a race tomorrow. And you can't do that if you're not training for it. So that's why our...”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“However, there was a management team that had sold their bank for 3.2 times book to an Ohio bank and they're sitting at home twiddling their thumbs. And so Mike Brown was the guy's name. We found Mike Brown through this massive effort. And again, this is one state in one sector of all the things we're doing. And Chris Dudy was the guy who was really leading it. And we went to the regulators and we said, we want to back Mike Brown, but it's very tough to get a charter. It's very tough to get on the approved list to do failed banks and to get law sharing. We want to put some capital in there and help resolve the Florida banking crisis. And the regulator said to us, you better. Because he ran a camel one-rated bank. We love him, and we're happy to support you.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“Of any consequence that weren't owned by City Bank of America or someone from out of state. We called on 29 of those thirty-one banks. Every one of them was technically insolvent. Their liabilities were greater than the fair market value of their assets. We didn't want to invest in any of them.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“And then in the final couple years before the global financial crisis, we were wondering what the quality of that book value was. And so we waited, waited, waited, but we were doing all the work. And we were doing all the reps. Then the credit crisis hit. And the first thing you do in those situations, we call it the catch-a-falling knife scenario, is get out of the way. So we watch the banking system crash and then we stepped in, working closely with regulators. We got de novo charters for the biggest bank startups in the history of the United States. We got into banks that didn't have a lot of legacy problems. We got the regulators to support us. And we had the owner operators ready to go. So as an example, Florida was a mess. There were 31 banks in Florida.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“A third party administrator, an asset manager, an adjudicator. And we will do free cash flow businesses often through thick and thin, through ups and downs, because if they are the best in their sector and they're providing necessary products to their clients, they're going to be okay over a seven, ten year period. And if we get into them and we don't put too much leverage on them and they really are the 20-foot pole vault or space, we'll be okay. We have to be very careful when we get into capital intensive businesses. So as an example, we didn't do a bank deal for seven or eight years before the credit crisis and we spent more time, I think, than any other firm in the banking sector during those seven or eight years, but it just didn't make sense. These banks were selling at three or four times books.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's a very good question. 20 foot pole vaulters, if the business isn't as good as we hoped, they'll figure out how to succeed. And we've got examples of that with people that plan A didn't work, plan B didn't work. They hung in there. We got a great result. If the management team is not special, our fault not theirs. We're the ones that judge them as special. Then we've got to manage that and figure out how to make it work for everybody involved. There are sectors that you need to stay away from and financial services is a pretty dangerous space. We divide the world in several ways, but one of the ways we divide the world is capital intensive businesses versus free cash flow businesses. And a capital intensive business would be a bank, an insurance underwriting firm, a big credit platform, and a free cash flow business would be an insurance broker.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“Get my business, you know the jargon. I don't have to have a 1.0 conversation with you. I really enjoy working with you. I think you respect what I built. I want you to be my partner. That's nirvana for us. Hopefully no banker, hopefully no auction. But even when there is a banker and an auction, we tend to get the owner-operator to choose us. And that gives us a big advantage. It won't get a deal for half price or anything like that, but it does give us the chance to do the deals we want to do very often.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“How do I serve them? So those are characteristics. And again, if you're out there and you've met all the people and you've been to the conferences and you're walking down the aisles in Orlando or Las Vegas and everybody's saying hi to you because you've been doing it for years and there aren't lots of private equity people at these conventions it isn't hard when you see that great team that's got a buzz, they got a vibe. There's a mojo going on and you call their customers and we know all their customers because that's the world we're in. And they say, oh, we love these folks. They are so great. And then you find out who they're looking to get as new customers and we can help them with a warm introduction. And we often will do that before we even have a chance to invest. We try to help people before and then they'll come to us and say, you know, you've been very helpful.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm not sure we can be that fine, certainly from the 12th and 16 footer. Obviously, passion, commitment, humility, many of these folks have lived in their world their whole life. And they just know it inside and out. If you ask them to run another business, they're not Six Sigma GE trained people who can go from light bulbs to jet engines. They don't want to. They're in their world and they know they're world cold. So number one, they have enormous domain expertise. Number two, they've got a tremendous passion. Number three, they have a team around them who they respect and work closely with who want to follow them. Number four, they're almost always very customer-centric. What does my customer want? Not what do I want to give them?”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“From already high levels, and I think some of that is a function of, okay, here we go back to hopefully a normal environment. Some of that is interest rates and leverage capability. And some of that is just, okay, now I got to put some money to work. So that was a benefit of this multi-year outbound targeted search. That's how it is supposed to work. But again, we miss a lot of deals. Even we find the 20 foot pole vaultar and they don't choose us or someone else pays more or we just, for whatever reason, don't get there. So we have to be working really hard in all these areas at all times. Because who knows a year or two from now which of these subsectors are going to be really attractive? So if we're not working on them now, we won't be ready to four, six years from now.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“didn't know we were dealing with people and they were more likely to choose us because they knew us and they were more anxious to team up with somebody because of a lot of uncertainty and everything else. And I think a lot of firms either”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“Are out there on the road all the time bringing management teams through so the senior investment committee folks meet them, keeping us current on these sectors so that when the opportunity comes, we can move on a dime because our investment committee doesn't meet and vote on something that they haven't been talking about and learning about and being actively involved in for years and years in the sector and for months and months and often years and years in the actual company. During COVID where you couldn't meet management teams, we did 17 deals. We put $6 billion to work and 17 companies. And we knew those management teams on average for over nine years. And we knew those sectors and studied them on average over 15 years. So we didn't have to do a deal over Zoom with people we.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“We will do a de novo startup. And that's an unusual tool to have in your toolkit because most private equity firms won't do that. We don't think of that as venture because we call them restarts. People are going to do again what they've already done successfully once. So we've done over 50 startups and people say, why did you do a startup there? And the answer is that's where the 20 foot pole vault was or the legacy issues in the existing companies are ones we don't want to take on or to buy into the business cost too much. So it really is a function of working with that 20 foot pole vaultar and his or her team. How do we get into business together? Because they are the reason we're successful. If we pick them correctly, and again, you can't do that if you don't kiss all the frogs and spend years and years. So our investment teams.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“Then the work begins. How do we get into business with this 20 foot pole vault? And there's basically three simple ways. If he or she owns the business, we try to get him to sell us $30, $50, 70%. We don't want to buy 100%. And we don't care whether we control the company or the management does really because the management controls the destiny of the company. We're there to help. We can make a good situation better. We can't make a bad situation good. So if they own the business, we try to get them to share the ownership. If they work for a big company, we hope that at some point their business will be sold and we can buy their business from the big company. And we've bought over 20 companies from Citibank and travelers and Swiss Re and all the big financial institutions. The third way is they don't control the company. They don't own it. It's not available. Maybe they've sold and they're on the beach.”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source
“When we meet him or her, they know more than we do about their business. And we don't know if they're a 12-foot pole vault or a 16 footer or a 20-footer because they're impressive because everybody that runs a business knows a lot about that business. We have to call on every single one of them, line them up against each other, ask them about each other, talk to their customers, suppliers, and go to the conferences and read the newsletters and study the business and try to figure out who is the best of breed in this sector. Who is the 20-foot pole vaulter? And often in these 70 subsectors, we never find a 20-foot pole vaulter. We're talking about an individual, but great individuals, great leaders bring posse with them. So it's really about the team. But we're looking for that team. Once we find the 20 foot pole,”
2021-08-09 · Capital Allocators · Private Equity Masters 8 – Chuck Davis – Stone Point Capital (Capital Allocators, EP.207) · IDENTIFIED FROM THE TRANSCRIPT · source