1/ A thread on Sidecar Investing, or “free riding on the superior capability of others” -Richard Zeckhauser

Jamie Dimon and @elonmusk are the only two people with F-U money that actually act like it.

Holding a big winner doesn’t feel like it should. The stock slowly, almost imperceptibly, grinds higher. But most of the time, it’s below its all-time high, making you wish you had sold. Then every so often, there’s a gut-wrenching drawdown. No wonder so few investors compound.

I’ve always been comfortable betting on people. It sounds unscientific until you realize how difficult it is to predict next year’s earnings, product cycles or the economy.

Perhaps the biggest shift I’ve seen in my investing career is how quickly the market recognizes a great business. If you wait until the numbers are clean, it’s too late. If you wait until the uncertainty clears, it’s too late. If you wait until everyone agrees it’s a great business, it’s too late. If it feels safe, the opportunity has likely passed.

“What Teledyne makes or sells is less important than the style of the man who runs it.” When I worked in fund management, there was intense focus on sectors and industries, categorizing businesses in ways that often felt arbitrary and superficial. It rarely got to the essence of what actually drives results. Then I read this line in Forbes, and everything clicked. Written decades ago about Henry Singleton, it captures a truth investors often overlook: businesses are expressions of their leaders. Products change. Markets evolve. Technologies come and go. But a capital allocation philosophy can endure for decades. Teledyne sold an eclectic mix of consumer, industrial, and technology products including Water Piks, hydraulic pumps, and infrared systems used in heat seeking missiles. The portfolio defied classification. Yet Teledyne became one of the great wealth creation stories of the twentieth century not because of what it sold, but because of how it was run. Singleton believed the CEO’s primary responsibility was capital allocation. He ignored pundits and the press. When Teledyne’s shares were undervalued, he repurchased them aggressively, a move that, unlike today, was deeply unconventional. When the stock traded at a premium, he used it as currency to acquire businesses at sensible prices, set aggressive targets for management then left them alone to operate. His discipline extended beyond acquisitions and buybacks. He avoided earnings guidance, used debt prudently, and focused relentlessly on per share value. Some investors were uncomfortable with the lack of transparency. Others recognized it as evidence of long term thinking. Those who understood the framework were rewarded with extraordinary returns. The lesson is not about Teledyne’s products. Investors frequently ask what a company makes when they should be asking who is making the decisions and using what process. A mediocre business can be improved by a disciplined allocator. On the flip side, even a great business will deteriorate under managers who overpay for growth, dilute shareholders, or pursue empire building. Managerial style reveals itself in subtle but observable ways: how leaders communicate, how results are reported, how deals are structured, and how capital is raised or returned. These are all bread crumbs providing insights into what is happening behind the curtain. Teledyne’s legacy is not a catalog of products but the imprint of one disciplined operator. If you want to understand a company’s future, study the people at the top and the framework they use to allocate capital. Everything else is secondary.

Being a pessimistic investor becomes a self-fulfilling prophecy. Leaving room for the possibility that a company is truly special puts the chance of catching a big winner on the table. And if you do this enough times, you’ll catch a stock that goes up 5-10-100x in value.

I’m endlessly fascinated by how companies like Danaher, Fastenal or even Amazon can hide in plain sight. Investors often point to survivorship bias, but I don’t think that explains it. It’s more of a granularity trap. We get so focused on the details that we miss something truly special right in front of us. Finding these long-term winners means stepping back from the minutiae and focusing on the DNA of the company and the true long-term potential. This may be the single most valuable investing skill.

While drawdowns are inevitable, great companies keep making higher highs and higher lows. This one may just be getting started.

This idea comes up again and again

Love the term “Chauffeur Knowledge” which reminds me of a coal mine tour I took on the buy-side. Awkward silence as a dozen or so fund managers ride down the elevator shaft. An hour later, everyone is an expert on longwall shearers and coal seams. It’s all an illusion.

The rational approach is to be permanently optimistic while maintaining the ability to survive the drawdowns.

“The annual report is the same document for every reader. The difference is what each reader sees in it.” @mastersinvest mastersinvest.com/newblog/20…