EP. 88: John Rotonti: The Ultimate Stockpicking Masterclass
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My guest today is John Rotonti — in my mind, John is a very diligent, thoughtful, deliberate stock analyst with a great gift for teaching others the necessary skills to analyze and evaluate businesses. He is kind, generous, and always so much fun to talk to. We recorded our first episode together about a year ago; scroll down to find it. It’s a truly wonderful conversation and an opportunity to get to know my guest. Today is John’s second appearance on the show, and we’ll go deeper with a stock picking masterclass delivered by someone I admire and respect.
John graduated from the University of Richmond with a degree in political science. He also holds a Master of Business Administration (MBA) from Tulane University’s Freeman School of Business, where he graduated in the top cohort of his class. In December 2013, he published a book titled "A Manual on Common Stock Investing." In 2015, he received the Freeman School of Business Rising Tide Award, an annual honor given to a graduate of the Burkenroad Equity Research Program who excels in the investment community, bringing pride to both the program and the Freeman School. Most recently, he was employed by The Motley Fool for nearly 9 years, voluntarily leaving as a level 3 senior equity analyst and Head of Analyst Training and Development. He identifies as a contrarian value investor by nature and due to life circumstances. He has a very successful, and incredibly well produced podcast that I recommend you explore.
In our conversation today, John, emphasizes the importance of focusing on high-quality, growing businesses with strong moats and good management teams.
He suggests maintaining a watchlist of thoroughly researched businesses and waiting for their stock prices to sell off before considering them as investment opportunities.
John recommends getting ideas from a network of investors, reading investor letters, and conducting constant research.
He outlines a quick glance process for evaluating potential investments, which includes assessing the balance sheet, income statement, and cash flow statement.
John advises investing in adaptable businesses with the potential to grow their intrinsic value over time.
He points out the opportunity to take advantage of crises to make strategic investments that can lead to long-term growth and improved industry dynamics. He stresses the importance of holding onto high-quality stocks and being slow to sell, as small positions can turn into significant gains and contribute to the power of compounding.
He cautions against investing in profitless companies and emphasized paying attention to the price paid for stocks.
Stay tuned until the end, when John clarifies the misinterpretation of Warren Buffett's philosophy and strategy.
Summary
In this conversation, John Rotonti discusses his investment process and how he finds high-quality, growing businesses. He emphasizes the importance of focusing on businesses with strong moats and good management teams. Rotonti shares that he maintains a watchlist of businesses he has researched in depth and waits for their stock prices to sell off before considering them as investment opportunities. He also gets ideas from his network of investors, reading investor letters, and constantly reading and researching. Rotonti explains his quick glance process for evaluating potential investments and highlights the significance of a company's ability to adapt and grow its intrinsic value over time. He also discusses the importance of taking advantage of crises and how companies can come out stronger by making strategic investments during challenging times. In this conversation, John Rotonti discusses the importance of holding onto high-quality stocks and being slow to sell. He shares his experience of seeing small positions turn into significant gains and emphasizes the power of compounding. John also talks about his successful track record at The Motley Fool and attributes it to his focus on high-quality, profitable growth businesses and disciplined valuation. He highlights the importance of avoiding profitless companies and paying attention to the price paid for stocks. John also clarifies the misinterpretation of Warren Buffett's philosophy and strategy, emphasizing the significance of holding wonderful businesses for the long term and avoiding overpaying.
Takeaways
Focus on high-quality, growing businesses with strong moats and good management teams.
Maintain a watchlist of businesses that have been thoroughly researched and wait for their stock prices to sell off before considering them as investment opportunities.
Get ideas from a network of investors, reading investor letters, and constant research.
Evaluate potential investments through a quick glance process that includes assessing the balance sheet, income statement, and cash flow statement.
Invest in businesses that are adaptable and have the potential to grow their intrinsic value over time.
Take advantage of crises to make strategic investments that can lead to long-term growth and improved industry dynamics. Hold onto high-quality stocks and be slow to sell, as small positions can turn into significant gains and contribute to the power of compounding.
Focus on high-quality, profitable growth businesses and be disciplined in valuation to achieve a successful track record.
Avoid profitless companies and pay attention to the price paid for stocks.
Clarify the misinterpretation of Warren Buffett's philosophy and strategy, understanding the importance of holding wonderful businesses for the long term and avoiding overpaying.
Chapters:
05:00 Introduction and Focus on Investments
07:50 Building a Watchlist and Idea Generation
13:33 Buying Opportunities in Market Sell-Offs
16:42 Companies' Ability to Change and Adapt
18:31 Dynamic Nature of Corporate Life Cycles
41:06 Directional Correctness and Holding the Right Businesses
46:13 The Importance of Being Slow to Sell
49:42 Building a Successful Track Record with High-Quality, Profitable Growth Businesses
53:29 The Significance of Avoiding Profitless Companies
1:02:17 The Misinterpretation of Warren Buffett's Philosophy and Strategy
Podcast Program – Disclosure Statement
Blue Infinitas Capital, LLC is a registered investment adviser and the opinions expressed by the Firm’s employees and podcast guests on this show are their own and do not reflect the opinions of Blue Infinitas Capital, LLC. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice.
Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed.
Information expressed does not take into account your specific situation or objectives, and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance.