Champouse Group Cast Study: LOOK COMMUNICATIONS LIQUIDATION

CHAMPOUSE GROUP LLC 

Champouse Group is operational as of December 16, 2014.  My investment framework is centered around a series of principles-a way of thinking about investing-that forces me to focus first on risk before I focus on return, always thinking in terms of price versus value.  I look very carefully at valuation, companies that produce good results under bad scenarios and search for free optionality, but require a bargain price.  I may be open to offering a percentage of the GP for investments between $5-20m.  I have significant opportunities that are durable under any economic environment, despite otherwise high prices across most, if not all asset classes.   Two year return expectations of 50%-100% without aggressive assumptions (I have done more than 36% annually net for the past 4 years with an average of 25% cash while running Fernbank Partners).  

Champouse Group Background

  • The Fund is an investment partnership founded in December 2014
  • The Fund’s objective is to produce above-average returns through conservative and opportunistic investing in under-followed equities, with flexibility to pursue other parts of the capital structure
Champouse Group Investment Philosophy
  • Modeled after partnerships managed by Warren Buffett from 1956 to 1969
  • Only invest in situations with asymmetric risk-reward profiles and value realization catalysts
  • Evaluate an investment idea as if buying an entire company, focusing foremost on “price” versus “value”
  • Focus on companies with predictable revenue sources and properly incentivized management teams
  • Exhaustive bottom-up research and original insight into every investment
  • Concentrate effort and assets on a limited number of “best ideas” to minimize risk of capital loss
 
Positioned for Long-Term Success
  • Patient, opportunistic investment process and a long term time horizon allows the Fund to pursue only high conviction ideas with the potential to produce outsized returns over time
  • Large discounts to fair value and presence of catalysts reduce reliance on direction of market and economy
 
Champouse Group Core Strategy
  • Long Biased Value oriented investment partnership – Short positions when appropriate
  • Long term, fundamental investors in businesses, not stocks
  • Tolerate higher monthly/quarterly volatility in exchange for absolute long-term capital appreciation
  • Focus on simple, predictable, under-followed, overlooked, misunderstood, unappreciated, ignored companies at very attractive valuations
  • Owner-managers who paid for ownership or otherwise founded the business
    High barriers to entry, high unlevered returns on equity, capacity to retain earnings – No or very limited need for debt financing, especially short-term recourse loans
    Hidden assets, free optionality
  • Avoid businesses and geographies likely to experience rapid change
    Identify catalysts to accelerate broad recognition of underlying value to guard against illiquidity risk
  • Use ownership to influence recapitalization options (use of owner funds) Only commit when the investment opportunity hits us over-the-head
  • When price is extremely cheap relative to our estimate of underlying value Exhaustive bottom-up research and original insight into every investment
  • Concentrate effort and assets on a limited number of “best ideas” to minimize risk of capital loss
Champouse Group Complementary Strategy
  • Selective investments in special situations e.g. securities with a timetable, results tied to corporate activity not general market
  • Mergers, reorganizations, spin-offs, tender-offers, post bankruptcy securities, etc
  • Arbitrage

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