Our Founder and CIO, Bob Robotti was recently interviewed by Ed Silverstein of The Wall Street Transcript (twst.com). Highlights are below:
On the Confluence of “Yes, I want to do that. I want to do that now” & Home Buying
“For the last 10 years, Millennials weren’t getting married, weren’t having children, weren’t thinking about living in a home, and if they did, they were happy living in the city. We think that Millennial trend is changing… people working from home, working remotely and working further outside the city bounds. And living in a new home — one that’s the way exactly you want it with the study the way you want. So you can close the door, and if the kids are in the other room and they’re studying from home, they can do that…
… So suddenly, “Yes, I want to do that. I want to do that now.”…
I would just add that with homebuilding, there’s still obviously a long runway ahead. And there was that decade-long supply/demand imbalance — COVID kind of was the catalyst to unleash that. …It’s a great confluence of events. You’ve got a macro environment that has very significant growth opportunities, and you’ve got an individual company that has a very differentiated business model and offering, and therefore can bring solutions to a business that needs solutions. So it’s a wonderful combination: the right time, the right place, the right company and an excellent opportunity.”
On No 3-Second Rule in Investing (Basketball Metaphor) & the Current Economic Cycle
“At the end of 2019, we wrote in our letter to clients that as the decade ended, it really was a strange decade. It was the one decade without a recession the entire time, but it was the slowest recovery ever. The recovery was extremely anemic. And you’ve had this trend with interest rates going down and down and down. And so we think that isn’t the future, that’s not the next decade.
And we actually do think, therefore, COVID also is accelerating trends, and things are going to change radically. And the next decade will look very different than the last decade. And this is the example analogy we use: There’s no three-second rule in investing. You could stand in the lane, you can stand under the basket, and there are all these basketballs there that nobody cares for because they were missed shots. People are inclined to say, “I don’t want to invest in that company. That’s a missed shot,” when you could pick it up and get an easy basket today. So there are many companies, we think — because our portfolio is just replete with them — that are absolutely misvalued based on the fundamentals of the business today and, therefore, reduced risk and excellent opportunities for upside and recovery.”
On What We Do, Being Active Investors & Why it Matters Now
“We’ve been doing it for over 35 years. We’re consistent. We stick to our knitting. We know what we do. It’s something in recent times that nobody cares about anymore. That’s perfectly fine. That means the competition looking at these companies is much less. And it’s not just doing the research; it’s becoming active owners of the business, whether that’s pushing management and boards to do the right thing, to position the business properly to maximize the opportunity. That can mean stepping onto the board, which gives us a seat at the table in the selection of the CEO.
One of the things we haven’t mentioned is how we have a new president in the United States. What impact does that have on your portfolio? Our view is, the president of the United States is the most important person in the world, but that person is not the most important person in our companies. That’s the CEO of that company.
So we’ve got good businesses that are well-financed, managed by smart managers, government policies inevitably change, and every company has to be responsive to that. If we’ve got the right company and the right CEO, you can easily respond to that. And that’s the person we’re focused on. And that’s something we can know about the business and we can know something about the CEO. We know a lot about those things. And therefore, that’s what’s going to drive the results in our portfolio, not who the president of the United States is, not government policies. They will react; they need to. But of course, that’s all manageable with a well-run, well-managed business.”
The full article can be found here: