Cove Street Capital Podcast Season 1 Wrap-Up
Season 1 of the Cove Street Capital podcast concludes with insights from Ben Claremon, Principal & Portfolio Manager. The outro highlights key themes, company stats, recurring lessons, and a sneak peek into Season 2. Cove Street Capital emphasizes the importance of vision, resilience, and empowering employees for long-term success in investment strategies.
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Compounders Podcast Season 1 Outro BEN CLAREMON PRINCIPAL & PORTFOLIO MANAGER COVE STREET CAPITAL
Safe Harbor 2 The opinions expressed herein are those of Cove Street Capital, LLC and are subject to change without notice. Past performance is not a guarantee or indicator of future results. Consider the investment objectives, risks and expenses before investing. The information in this presentation should not be considered as a recommendation to buy or sell any particular security and should not be considered as investment advice of any kind. You should not assume that the security discussed in this report is or will be profitable, or references we make in the future will be profitable or equal the performance of the security discussed in this presentation. The report is based on data obtained from sources believed to be reliable but is not guaranteed as being accurate and does not purport to be a complete summary of the available data. Cove Street Capital, LLC is a registered investment adviser. More information about us is located in our ADV Part 2, which is on our website or upon request; http://covestreetcapital.com/faq/
Presentation Overview 3 Season 1 company roster and stats Major themes that we heard throughout Season 1 Season 2 sneak preview Highlights and re-plays our favorite clips from the first 12 episodes Another thank you to our sponsor: Tegus Request for feedback and contact information
4 Season 1 Stats Market Cap ($mm) $9,048.67 $17,799.75 $1,367.54 Company Name Alleghany Corporation Markel Corporation StoneX Group Inc. Ticker Y MKL SNEX 12 interviews Average market cap: $4.2B Largest: Markel Smallest: UFP Technologies Two Fortune 500 companies An eclectic mix of industries We learned a lot about waste collection/management and insurance KAR Auction Services, Inc. Millicom International Cellular S.A. Avid Technology, Inc. Clean Harbors, Inc. Viasat, Inc. The St. Joe Company KAR $1,848.56 TIGO AVID CLH VSAT JOE $3,677.61 $1,329.36 $6,010.94 $4,039.52 $2,609.67 Heritage-Crystal Clean, Inc HCCI $767.79 The E.W. Scripps Company UFP Technologies, Inc. SSP UFPT $1,471.22 $485.02 Average $4,204.64
5 Recurring Themes 5 1. Without clarity of vision and a level of focus, it is very hard for companies to be successful in the long-run. 2. The best companies exhibit the willingness to suffer short-term pain by investing through the P&L and sacrificing margins to generate outsized returns in the long run. 3. If you think something at the company needs to change, do it now. You can also probably move faster than you think. 4. It is absolutely essential for management teams to find a way to motivate and show appreciation for employees that are at the bottom of the organization. 5. The best employees are the ones who think and act like owners. Accordingly, companies need to empower people to make decisions and make as many of them shareholders as possible.
Season 2 Sneak Preview Season 2 to launch at the beginning of December Great lineup already booked, including: Our first non-US listed company CEO of a company that started as a SPAC Another Fortune 500 CEO CEO of a company that was recently the subject of a short report Word of mouth is helping Guests are recommending Compounders to other CEOs Investors are introducing us to companies they own/follow Aiming to have 12 episodes again We still have a few slots so please reach out to us with recommendations and introductions We need the support of the listeners to continue to source interesting guests We have great momentum but we can always use more potential guests
Episode 2 7 Interview with Alleghany (Y) CEO Weston Hicks Favorite Clip: Weston discussing the process through which Alleghany bought TransRe in 2011, precisely when everyone hated re-insurance companies. Lesson: Being a patient, contrarian value investor, especially as a public company CEO, can lead to company-changing acquisition opportunities. Full Interview: https://covestreetcapital.com/compounders- podcast-interview-weston-hicks/
Episode 3 8 Interview with Markel (MKL) Co-CEO Tom Gayner Favorite Clip: Tom explaining how being a Co-CEO not just a CIO at Markel has made him more patient, empathetic and understanding when a public company he invest in is not performing as well as it could. Lesson: Investors often want change to happen at companies faster than any company is capable of changing. So, the investment community should be more patient and understand that even very competent leaders can t control the pace of change. Full Episode: https://covestreetcapital.com/compounders- markel-corporation-co-ceo-tom-gayner/
Episode 4 9 Interview with StoneX (SNEX) CEO Sean O Connor Favorite Clip: Sean telling an eye-opening story about how, in 2009, his unknown company bought FC Stone, a great franchise, for pennies on the dollar. This was a deal that changed the trajectory of the company. Lesson: While it can be very difficult to put money to work during uncertain times, that is when you can find the best acquisition opportunities. Don t be afraid to swing big if you see crazy valuations for quality assets. Full Episode: https://covestreetcapital.com/creating-a-100- bagger-sean-oconnor/
Episode 5 10 Interview with Kar Auction Services (KAR) Chairman Jim Hallett Favorite Clip: Jim discussing how, in order to inspire employees, he asks them what they would do for one more car. The how far would you go? concept is applicable across industries. Lesson: Motivating employees requires both keeping them focused on the long-term vision of the company and pushing them to go a little further for their customers on a day-to-day basis. Full Episode: https://covestreetcapital.com/interview-kar-auction- services-jim-hallett/
Episode 6 11 Interview with Millicom (TIGO) CEO Mauricio Ramos Favorite Clip: Mauricio explaining what he learned from working for Liberty Media s John Malone and Liberty Global CEO Mike Fries and from being on the Charter board with Tom Rutledge about how to be successful in cable. Lesson: Clarity and focus are absolute keys to success. If a company is doing too many things, it is probably not doing anything exceptionally well. Eliminate peripheral endeavors to focus on a core. Full Interview: https://covestreetcapital.com/millicom-ceo- mauricio-ramos/
Episode 7 12 Interview with Avid Technology (AVID) CEO Jeff Rosica Favorite Clip: Jeff sharing the biggest lesson he has learned since becoming CEO. You can most likely make required changes faster than you think. So, just rip off the band-aid Lesson: Especially as a new leader, you might want to be patient and not push for change because you are worried about upsetting people or negatively impacting the culture. However, it is often worse if you wait, and you should institute changes as fast as you can. Full Episode: https://covestreetcapital.com/avid-technology- ceo-jeff-rosica/
Episode 8 13 Interview with Clean Harbors (CLH) Chairman and CEO Alan McKim Favorite Clip: Alan discussing how not all companies are born with return on capital as a North Star. Sometimes, it is an evolution that can be helped along by Board Members and shareholders. Lesson: Companies with lots of employees and operations across many states or countries can be so focused on the day-to-day that they may not be paying enough attention to the metrics investors care about. Good partners work with companies to help them continuously improve. Full Episode: https://covestreetcapital.com/alan-mckim-clean- harbors/
Episode 9 14 Interview with Viasat (VSAT) Executive Chairman Mark Dankberg Favorite Clip: Mark talking about the value of understanding market dynamics and why not all industries eventually end in a winner-take-all situation. Lesson: As a company leader, you should look outside of a specific industry to better understand business theory and general business strategy so that you can accurately anticipate where your end markets might go over time. Full Episode: https://covestreetcapital.com/creating-the-fastest- global-satellite-broadband-network-with-mark-dankberg- executive-chairman-of-viasat-inc/
Episode 10 15 Interview with The St. Joe Company (JOE) CEO Jorge Gonzalez Favorite Clip: Jorge discussing how he asks the people at the company to act as if it was their money on the line. According to Jorge, that leads to clarity of thought when making decisions regarding capital allocation. Lesson: All companies want their employees to act like owners. Often, that mentality is hard to embed within an organization. By keeping the message simple, it allows people to ignore the noise and focus on making the right long-term decisions. Full Episode: https://covestreetcapital.com/the-next-50-years-in- western-florida-with-jorge-gonzalez/
Episode 11 16 Interview with Heritage-Crystal Clean (HCCI) CEO Brian Recatto Favorite Clip: Brian explaining about the best ways to attract and retain employees, especially in a very difficult job market. Lesson: In businesses where the automation opportunities are limited, the people are the greatest assets. As such, companies need to make sure that the people who work in the field are supported and know they are valued, even if it means giving out the CEO s cell phone number. Full Episode: https://covestreetcapital.com/brian-recatto/
Episode 12 17 Interview with The E.W. Scripps Company (SSP) CEO Adam Symson Favorite Clip: Adam discussing an instance of when the company has been willing to suffer short-term losses in order to garner outsized, long- term gains. In this case, SSP acquired into a podcast business, spent a bunch of money to build and then exited once the valuations got more frothy. Lesson: As a CEO, you should be a portfolio manager. You should look at what you own and ask: is someone else a better owner of this business? If so, you should be willing to monetize that asset so that you can invest more in the businesses in which you have a competitive advantage. Full Episode: https://covestreetcapital.com/e-w-scripps- company-ceo-adam-symson/
Episode 13 18 Interview with UFP Technologies (UFPT) Chairman and CEO Jeff Bailly Favorite Clip: Jeff talking about how his views on attracting and compensating people have changed over the last 25 years. Lesson: When it comes to compensation, you get what you pay for. Companies can become attractive places to work if they are willing to pay up for good people and combine that with an entrepreneurial culture and the opportunity to become rich if the stock appreciates.
Thanks again to Tegus 19 Tegus has become an integral part of Cove Street s investment process When we get to the 3rd stage of our investment process, we invariably reach out to Tegus in order to source high value experts who can help us better understand the companies we are researching We even use the word Tegus as a verb internally Tegus Co-CEO was willing to sponsor Compounders even before we had released a single episode Tegus has been a great partner and his support speaks to the quality of people who work there If you are interested in learning more about the Tegus platform, please visit Tegus.co
Feedback Request & Contact Info 20 We would love comments or feedback on how we can make the show better for Season 2 And warm introductions to potential guests! Email: bclaremon@covestreetcapital.com Twitter: @BenClaremon https://twitter.com/BenClaremon
