11: Jeff Stacey on Drums, Stocks, and Event-Driven Investments
I’m excited to sit down with Jeff Stacey on today’s episode of the podcast. As the founder of Stacey Muirhead Capital Management, Jeff brings decades of experience to our conversation. He discusses his criteria for long-term investment opportunities, his experience at annual meetings, the benefits and drawbacks of event-driven investments, and more.
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Solid Criteria for Long-Term Investments
Jeff is a long-term shareholder in Berkshire Hathaway, Fairfax Financial, and Markel. He found that all three companies had the qualities that he looks for before making long-term investments.
- Great business economics
- The business is run by honest, capable, and talented people
- They think and act like owners
- The owners have skin in the game
- The business is available at an attractive price
“We, just like the attributes of property and casualty insurance companies if they're well run, and there's not a lot that are, and certainly Fairfax, Markel, and Berkshire have stood the test of time in that regard.” Jeff Stacey (04:15-04:29)
What Has Jeff Learned from the CEOs of These Companies?
The CEOs of Berkshire Hathaway, Fairfax Financial, and Markel are Warren Buffett, Prem Watsa, and Tom Gayner (in that order). Jeff has learned valuable lessons from each of these men that have shaped his investing at Stacey Muirhead Capital Management.
“First and foremost, all three individuals have outstanding character. And, you know, they're motivated to do the right things for their shareholders because they are in fact, shareholders.” -Jeff Stacey (08:42-09:00)
Watching how all three CEOs make decisions and commit their capital has made Jeff a better investor. He also appreciates that they are all humble and honest people.
Jeff attends the annual meetings for each of these companies to learn directly from Warren, Prem, and Tom. However, he also loves the indirect learning that happens at these events. Learning from other investors and making new professional and personal relationships has been equally as valuable to him as the direct learning that takes place. He attributes the positive experience to the culture of value investors.
“I think it's just this common bond and commitment to getting better at investing and getting better at being a good productive citizen in this country and a good person.” -Jeff Stacey (12:22-12:34)
Building a Global Portfolio
Jeff is a shareholder in Fairfax India and feels extremely optimistic about the opportunity. In 2019, he was a part of a trip to India to visit the new airport terminal, which was impressive and promising for the future of the country.
Jeff’s portfolio currently includes 30 positions. From a big-picture point of view, his company tries to do two things for its investors: maintain a limited number of long-term investments (such as Berkshire Hathaway, Fairfax Financial, and Markel investments) and participate in event-driven investments.
Event-driven investments are the pursuit of profits from announced corporate events, such as mergers and acquisitions, liquidations, spin-offs, etc. There can be more downside than upside in event-driven investing, but you can also have a higher probability for success.
“We like event-driven investing because it just gives you another page in your investment playbook if you will. If you can't find things to do on the long-term investing side, maybe there are opportunities in event-driven, that are better than just leaving your money in cash. So that's, that's a little bit how we think about it.” -Jeff Stacey (26:58-27:22)
Stacey Muirhead Capital Management also maintains a third bucket for investments that don’t fit into the long-term or risk-driven categories. An example of that includes distressed bonds.
Final Questions with Jeff
Jeff’s Daily Routine:
Jeff wakes up early and does his reading in the morning. He tries not to spend the day fixated on stock market prices, and he eliminates distractions by turning off notifications in his email inbox. Instead of being glued to his inbox, he goes through his emails once or twice a day.
Books He Has Read Recently or Recommends:
Confidence Man by Maggie Haberman
Richer, Wiser, Happier by William Green
The Psychology of Money by Morgan Housel
Meet Jeff Stacey
Jeffrey Stacey is the Founder of Stacey Muirhead Capital Management Ltd. Jeff has almost 30 years of investment industry experience. Prior to starting Stacey Muirhead Capital Management Ltd., he was employed with a boutique Toronto investment firm where he was also a shareholder.
Jeff has an Honours Bachelor of Business Administration degree from Wilfrid Laurier University and is a Chartered Financial Analyst. He is a member of the Finance and Investment Committee and an Advisory Board Member of the student managed School of Accounting and Finance Investment Fund at the University of Waterloo. He is also an Advisory Board Member of the student managed Ivey Value Fund at the University of Western Ontario. Additionally, he serves as a member of the Dean’s Advisory Council at the Wilfrid Laurier University School of Business and Economics and on the Board of Trustees at Parkminster United Church. He is a former director of Rainmaker Entertainment Inc. and previously served on the Board of Trustees and Investment Management Committee at the University of Guelph.
Connect with Jeff:
The information presented in this podcast or available on the website is not intended as and shall not be construed as financial advice. This podcast is produced for entertainment value. Investing is inherently risky. And I encourage you to seek financial advice from a professional who is aware of the facts and circumstances of your individual situation.
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