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Ryan Batchelor

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64
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2021-09-16
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2021-09-16
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1
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podcast

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  1. “Emotions or heard behaviors, which can lead to opportunity if you're willing to move against the crowd. Sir John Templeton's my all time favorite investor. I remember once he gave an example of If you're going to build a bridge, you'd be an absolute idiot not to take the advice of the ten best bridge makers in the world. They know how to build bridges. These engineers know what they're doing. If you go to Wall Street and the ten analysts tell you you need to buy this stock. So absolute unanimity. More than likely you should not take their advice. The idea of being a contrarian makes a lot of sense. We think that there are times the market loses its mind and if you do the right analysis and you have the right temperament to be a contrarian you can make a lot of money. We think it's warmer in the crowd, but there's money to be made by being willing to step outside the crowd. So in addition to gravitation,”

    2021-09-16 · Capital Allocators · Ryan Batchelor – Clifford Capital Partners (Manager Meetings, EP.11) · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “When they're temporarily out of favor with the market. So you could call that approach a contrarian value approach if you want. There's a lot of ways to make money in stocks, but the idea of buying with a margin of safety immediately resonated. I look at you guys at WCM. Margin of safety is probably found for you in widening competitive moats. Tremendous cultures, which leads to better than expected growth rates. That's on the same spectrum of what I do, but we're looking for more of the type that are very out of favor and have fallen to a price where we believe we can earn excess returns. Brian Yachman helped provide the foundation. Then I read everything I could get my hands on, loved it. A lot of what I learned during that time is sometimes investor behaviors are driven by”

    2021-09-16 · Capital Allocators · Ryan Batchelor – Clifford Capital Partners (Manager Meetings, EP.11) · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “The son of Don Yachman, great value investor, been around since the mid seventies, wonderful analyst. Brian was a great mentor to me. We had an absolute blast picking stocks our second year of business school. In fact, I don't remember a whole lot of anything else. It really added a ton of fuel to my passionate fire of stock investing. And during that second year, read dozens of investment books, studied the patterns of the best investors, Warren Buffett, Benjamin Graham, Seth Clarman, Phil Fisher nod to your growth side, Paul, Don Yachman, Sir John Templeton, Marty Whitman, David Dreaman, a lot of anything I could get my hands on. It was actually funny my wife was pregnant at the time, and every now and then she'd crawl over the bed and I'd be hidden in a corner reading investment books or doing stock research and try not to wake her up. There's a lot of ways to skin the investment cat, but I latched onto the idea.”

    2021-09-16 · Capital Allocators · Ryan Batchelor – Clifford Capital Partners (Manager Meetings, EP.11) · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “An institutional investor. He'd seen a lot of portfolio managers. And that really stuck out to me. At the time, I loved stocks. It was the internet bubble after all 99, 2000, 2001. I'd never really considered stock investing as a career, but Wayne's words stuck out, and so I started kicking around the idea of starting a firm with Wayne at the time. The two of us got our heads together and said, well, let's get some experience. Let's figure out investing. Let's start a boutique investment shop someday. And so the next logical step for that was business school. So off I went to business school at BYU in Provo, Utah, the Marriott School of Management, fantastic experience, but there was really only one thing that stood out there. I was selected to be part of the Silver Fund, which is a student-run portion of the BYU endowment. And while there, I developed a friendship with Brian Yachman. So the Yachman family, Brian is”

    2021-09-16 · Capital Allocators · Ryan Batchelor – Clifford Capital Partners (Manager Meetings, EP.11) · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “I was flattered that he said that, but I was only trying to do the right thing. No big deal, but then something he said stood out to me big time. He said, Ryan, you have the right skill set and temperament to be a really good portfolio manager.”

    2021-09-16 · Capital Allocators · Ryan Batchelor – Clifford Capital Partners (Manager Meetings, EP.11) · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “KPMG did not file an audit opinion based on the work that I was in charge of. I went way over budget on my audit hours, got a little pushback from that, obviously pushback from management. But we ended up not issuing an audit opinion, which I assume saved KPMG a ton of money in the end when their client went bankrupt, and Spiegel obviously eventually filed for bankruptcy. How does that relate to Clifford Capital? Wayne Pearson, who was a seasoned institutional investor and a mentor of mine, he was aware in big picture terms about this audit of mine and some of the issues and the drama that was unfolding. I remember very vividly one night Wayne had mentioned to me You know Ryan it's very rare for someone who's just a couple years out of college to have the conviction and do the analysis that you did to basically take on management and say hey you guys aren't doing something right and stick to your convictions”

    2021-09-16 · Capital Allocators · Ryan Batchelor – Clifford Capital Partners (Manager Meetings, EP.11) · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “Error, if you will, or room for manipulation possibly. The second one relates to their credit losses. As a credit card company, that's a big deal. So those two things are really the only things that mattered for this audit. There's a lot of other stuff you do as an auditor, but really it was this asset and there are loan losses that really mattered. And there were some yellow flags there. And so as I dug deeper, those yellow flags turned more red until they got really red. And we knew we had hit a nerve when one day I was in the CEO's office and he not so politely asked me to get the bleepity bleep out of his office. And I was like, okay, we've hit the funny bone. Clearly there's something going on. So make a really long story short after a lot of analysis, focusing on these few things. We identified some accounting oddities that ended up causing this bank to liquidate and Spiegel to go bankrupt.”

    2021-09-16 · Capital Allocators · Ryan Batchelor – Clifford Capital Partners (Manager Meetings, EP.11) · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “Catalog business based out of Chicago. They're best known for the catalog. They actually own the Eddie Bauer brand back then. So they had a little credit card company in the Portland area and about a third a little over a third of their sales came through their private label credit card business. This business was based in Portland. That was my largest client. Spent a lot of time working there. My first couple of years I was one of the staff members. And then on the beginning of my third year, I was the in charge of this audit. I was in charge of the audit work. I won't get into a ton of the specifics, but my team's audit work and the things I was looking at uncovered a few yellow flags with some of the things they were doing in their accounting. These yellow flags related to two things number one their largest asset, which ironically required a lot of managerial assumptions, so room for”

    2021-09-16 · Capital Allocators · Ryan Batchelor – Clifford Capital Partners (Manager Meetings, EP.11) · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “All the time. So interestingly, it was actually an experience at KPMG that led to the start of Clifford Capital Partners. Auditing might be considered boring to some, but my experience with anything but, in fact, I was directly involved in auditing a credit card company that was owned by an old retailer called Spiegel. You might be familiar with Spiegel. Mail order catalog.”

    2021-09-16 · Capital Allocators · Ryan Batchelor – Clifford Capital Partners (Manager Meetings, EP.11) · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “Thanks, Paul. Pleasure to be with you as always in the beautiful Laguna Beach. So my start ironically came as an accountant. So as an accounting major in college, and when most people hear the words accounting and auditing, they kind of glass over, don't get very excited, but KPMG was my first job out of college, and I absolutely loved accounting. I loved getting to know new businesses every few weeks. I tended to like the research part of that, learning what makes businesses tick, how they make their money, and audit work, you actually designed an audit program around that. What are the risks to these revenue streams? So I think that was what got me interested in investment research to begin with. Very energizing to get to know a different company, love figuring out how these companies worked, and also moving on to different companies.”

    2021-09-16 · Capital Allocators · Ryan Batchelor – Clifford Capital Partners (Manager Meetings, EP.11) · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “Very different where growth stock managers run international and global portfolios. They're focused on the small cap value area. It's not an area that I love, but I will tell you that it's an area that in March of 2020, when the market sold off really hard, I decided, you know what, it's probably a good time to allocate some of my capital value. So I made a pretty significant investment. Luckily at the trough, I of course had no idea it was the trough and it could have troughed for the next few months. But I took a couple of cuts at them in March and then another one in April and they've performed brilliantly from those bottom. So it's a very different strategy, but it's a strategy that you need. Smaller company, value companies obviously do different than large cap growth companies, which is the world we live in. So from my perspective, it was a great way for me to diversify, but also get a true stock picker that's actually working on a lot of active share and trying to add.”

    2021-09-16 · Capital Allocators · Ryan Batchelor – Clifford Capital Partners (Manager Meetings, EP.11) · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “And I always said at that time, boy, you know, if we ever get in a position where we can actually invest in people and help people with their own firms, then that's something that we really want to do. It really is as simple as that. I wish I told you that we did this full analytics on their track record and looked at rolling three years and one year and dug into the process. We didn't. And part of that's because Mike Trigg had a great relationship with Ryan for a lot of years. So he knew he was a good investor. And plus Clifford also had a couple of really well-known investors invested in the firm like him. It's probably going to work out pretty well.”

    2021-09-16 · Capital Allocators · Ryan Batchelor – Clifford Capital Partners (Manager Meetings, EP.11) · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “So, with all of the due diligence processes that you've been through on the other end at WCM, how would you compare your efforts when you're thinking about working with Ryan and Clifford Cap with all the other investors that have done work on WCM over the years?”

    2021-09-16 · Capital Allocators · Ryan Batchelor – Clifford Capital Partners (Manager Meetings, EP.11) · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “On today's manager meeting, Paul Black speaks to Ryan Bachelor. Paul is a popular past guest on capital allocators and the co of WCM Investment Management. Ryan is the co-founder and portfolio manager at Clifford Capital Partners, a $320 million value manager based in Alpine, Utah. Clifford employs a blend of core and deep value holdings selected through bottom-up research into sustainable wide moat businesses for core holdings and out of favor stocks for deep value holdings. The overlap of interest in moats led WCM to take an equity stake in Clifford three years ago. We'll start with my chat with Paul about what led him to Reiner.”

    2021-09-16 · Capital Allocators · Ryan Batchelor – Clifford Capital Partners (Manager Meetings, EP.11) · IDENTIFIED FROM THE TRANSCRIPT · source