Simulating Ten Opportunities from 2013-2016
Introduction | 5 min read | An introduction to my "Traveling Through Time" case study series
I didn’t begin my value investing journey until I graduated from university in 2019. So, I wasn’t investing from 2013-2016. But as Warren Buffett said, the best way to improve your investment skills is to simply “do one case study after another.” This is my attempt to do just that.
The Traveling Through Time case study series contains 10 write-ups analyzing the decisions I hypothetically made on investment opportunities featured in Geoff Gannon’s Singular Diligence newsletter between 2013-2016. All of my write-ups are 3,000+ words in length.
Disclaimer
Initially, I published four of these reports on my website, midstoryventures.com. By December 2022, I will have shut down the website and transferred all my work here.
As of November 30, 2022, I have added three new write-ups to this case study series.
Here are the top questions that I have received regarding this case study series:
#1 What is the Traveling Through Time case study series?
For the case study series, I selected 10 companies from Geoff Gannon’s Singular Diligence newsletter.
For each company, I would travel through time and decide if I would invest 20% of my capital (1) at the time the company was featured in the Singular Diligence newsletter (2) solely based on the facts contained within the report.
Then, I tracked the business and market performance of the company and compared that to my initial thesis and assessment.
#2 Can you give an example?
For example, Geoff Gannon published a published a 10,000+ word report on Movado on October 8, 2015, as part of his Singular Diligence newsletter.
In the month of Feb. 2021, I read the report, pretended I was an investor living in the month of Oct. 2015, and decided to put 20% of my capital into Movado.
I did this exercise solely based on the facts contained within the report. I also did this without any prior knowledge about the business, stock, or stock performance (and to the best of my ability, without any hindsight of transpired economic conditions).
Then, I compared my decision to the business and market performance of Movado from Oct. 2015 to Feb. 2021. I saw that business and market performance was lower than expected and found I three tangible areas in which I could improve my decision-making process.
#3 What is the format of the write-ups?
The write-ups that you read describe how I approached the case study, from start to finish. It follows five points:
Would I invest 20% of my capital into the company on the day of the opportunity (the day report was published)?
How would it have played out if I sold my stake today (the day I am finishing the case study)?
How would I have changed my process, given the results?
What are my concluding thoughts from this case study?
#4 What are the limitations of this case study?
Annie Duke’s Thinking in Bets cautions how we evaluate past decisions, especially since the resulting fallacy can give you the wrong takeaways.
I do my best to identify compare what actually happened to what was controllable or knowable at the time. Technically, something like COVID-19 (an event known in hindsight) is not knowable, but every investment should have an adequate margin of safety to consider “the normal vicissitudes of life.” So, as you read how I evaluate my decisions in light of the outcomes, I try to find a balance between “nothing is knowable” and “uncertainties are expected.”
#5 Why am I doing this case studies series?
In my 2020 Annual Letter, I identified that my biggest area of improvement in 2021 was decision-making.
I believed that dedicating time to a case study series would be the fastest way to provide input into my decision-making skills, without any losses (all capital is theoretical so no monetary losses, so only blow I am taking is the one to the ego).
The biggest benefit is that you have the gift of “knowing the outcome.” In other words, you have immediate feedback on what may have been right and what may have been wrong. From there, you can adjust your decision-making skills accordingly.
#6 Why use Geoff Gannon’s Singular Diligence reports for this case study series?
Most investors choose to do case studies on investments made by Warren Buffett, Charlie Munger, and Peter Lynch.
There are two main reasons why I don’t prefer this approach.
People build case studies around investments that are well-known. This impairs your ability to put in hard effort, thinking, or analysis. You probably heard about the success of Buffett’s investment in See’s Candy before you made it a case study, so you are dealing with extreme confirmation bias.
Most of those investments lack the information that the guru used to make the decision. The complete picture is required to have the most fruitful case study.
For those reasons, I chose Geoff Gannon from Focused Compounding. Before Geoff Gannon and Andrew Kuhn established Focused Compounding Capital Management, Geoff wrote a paid newsletter with Quan Hoang called Singular Diligence.
Over 27 months, Geoff and Quan published 27 reports on 27 businesses. Each report discussed the company’s durability, moat, quality, growth, capital allocation, value, appraisal, and opportunity for misjudgment in 12,000+ words.
I believe these reports are a great foundation for a case studies series on decision-making for three reasons.
The reports contain all the information I would need to make a decision.
They were also published 5+ years ago, so I would have the benefit of knowing how it played out over a long enough time period.
These are also the types of companies and/or situations that fit within my investing style, so it would be a natural fit with my framework.
#7 How did you select 10 companies among the 27 featured in the Singular Diligence newsletter?
These 10 companies were selected among the 27 because:
I did not read the report before starting this case study.
I did not have any knowledge of the company or stock’s performance since the report was published.
#8 Where can I read them now?
You can find all these reports on the Case Studies section.
Feb 2021 | Movado Group: “Buying” in Oct. 2015
Jul 2021 | Town Sports International: “Passing” in Feb. 2014
Jul 2021 | John Wiley & Sons: “Passing” in Sept. 2013
Nov 2022 | Village Super Market: “Passing” in May 2014
Nov 2022 | W.W. Grainger: “Passing” in Apr. 2016
TBD | Frost Bank: Coming soon
TBD | Prosperity Bancshares: Coming soon
TBD | Luxottica: Coming soon
Note: Updated as of 12/2/22.
#9 Where can I access Geoff’s reports published in the Singular Diligence newsletter?
Thanks to Geoff and Andrew, I have received their permission and blessing to build a case study series off of their work.
Geoff and Andrew recently made the Singular Diligence reports freely accessible to the public. You can find these reports as well as Geoff’s other writings on focusedcompounding.com.