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How Creative Thinking Informs The Investment Process

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Hard breaks are a necessary ingredient of peak performance, yet they are often viewed as a sign of weakness. Research shows that the regular use of recovery periods is a common feature of dominant performers across multiple disciplines. Taking time to recover enhances our performance under pressure.

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Over the past several weeks, I've visited companies and investors on the west coast, renewed my value investing vows in Omaha, presented at CFA North Carolina's Annual Meeting in Raleigh following our family office board meeting in Lenoir, and dissected about 25 stock pitches at ValueX Vail. We also managed to establish two new core positions in the portfolio over this time, which we will disclose in our mid-year letter.

But first . . . recovery.  I am headed down to the Gulf this afternoon for a "hard break" - something my friend Aaron would strongly encourage all of us to do. Dog Island, for the most part, is completely off the grid (just slightly more extreme than my usual communication habits). Next to the mountains, it is the best place I know to unplug.

The benefits of dropping off the grid are far reaching and long lasting. We need to take the time to free up space in our mind and allow creativity to sneak its way in. But where do the new ideas come from that fill the void left by the old ones?

Creativity is the by-product of colliding schools of thought. Different schools don't collide if they are running in the same direction. Running hard arrests creative thinking. Slowing down, sitting still, or better yet, just not thinking, are the most underused and undervalued tools in the investor's toolbox.

Let's Get Creative

A few years ago, I pitched Kennedy Wilson, as a play on distressed European real estate.

Creative Thinking

Then this happened.

Creative Thinking

A couple years ago, I pitched SeaWorld.

Then this happened.

Creative Thinking

This year, I was thinking about pitching the dollar stores.

Creative Thinking

Then this happened.

And THIS happened!!

Creative Thinking

So tonight, I thought I’d talk about something I am actually pretty good at.

Something that everybody does on a regular basis.


Creative Thinking

The great French poet and novelist, Victor Hugo, whose masterpieces include Les Mis and The Hunchback of Notre Dame, had a unique way of dealing with procrastination: he had his servant strip him naked in his study and not return with his clothes until his work was complete.

Herman Melville reportedly had his wife chain him to his desk while he was struggling to finish Moby-Dick.

Gene Fowler wrote dozens of books and screenplays during his career in Hollywood.

“Writing is easy,” said Fowler. “All you do is sit staring at a blank sheet of paper until drops of blood form on your forehead.”

Leonardo da Vinci had a reputation as a daydreamer who never finished anything. It took him 6 years to complete the Mona Lisa. He only finished The Last Supper after The Duke of Milan threatened to cut off funds.

So it would seem that each of these brilliant men were very good at screwing themselves. Yet they created some of the most beautiful art in their respective fields.

Are these statements inconsistent? Let’s have a look.

Article by Broyhill Asset Management

See the full PDF below.

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Sheeraz Raza

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