April 13, 2024
Matthew Peterson’s Turkish Insights
How to use your body to accelerate good choices
I first crossed paths with Matthew Peterson at a BBQ he organized during the Berkshire AGM. Little did I know then, he’s the mastermind behind Peterson Capital Management, LLC, boasting an impressive 14%+ CAGR over 11 years. After returning home, I was thrilled when he agreed to an online interview—it was a fascinating experience.
In my engaging chat with Matthew Peterson of Peterson Capital Management, LLC, he shared personal investment wisdom.
Here are my key personal takeaways from the 75-minute-long interview.
1. Embrace Volatility
I was astonished when Matthew refused to take credit for his fund’s consistent 14% annualized performance. He shared that his fund has experienced volatility.
Volatility is just a part of the journey. What’s most important is sticking to fundamentals: buying solid companies at extremely low prices and letting time work its magic.
2. Concentration Builds Wealth
The greatest compounded return lies somewhere between 2 and 10 positions. Over-diversification will diminish the return.
3. Attractive Opportunities in Turkey
The stock market in Turkey is still inefficient. Many great businesses are generating growing revenue from foreign income while keeping their costs low domestically due to the depreciation of the Lira over the years. Numerous excellent businesses are selling at low PE multiples.
4. Using Sell Put Options to Your Advantage
Selling put options allows investors to buy stocks at much cheaper prices than the market price. It also allows investors to collect a premium in advance. This float can then be reinvested to further optimize portfolio returns. Warren Buffett has also used this strategy to buy great businesses like Coca-Cola.
5. Capital Allocation Is Key
Invest in companies with excellent capital allocation skills. Check out the board members of the company and assess their capital allocation skills.
If we need some investing ideas, we can check out the 13F to peek into what great value-based funds like Guy Spier’s Aquamarine Capital, or Bill Ackman’s Pershing Square Capital Management, are investing in.
6. Bottom-Up Analysis
Instead of speculating on the next rising trend, sector rotation, or what will happen to interest rates (which are unknowable and uncontrollable), investors should focus on the fundamentals using bottom-up analysis and buy businesses that have great business models at attractive prices.
7. It’s Very Hard to Outperform the Market
Even professional investors frequently fail to outperform the market. For retail investors who are unable to keep up with the workload, simply buying the market is not something to be ashamed of.
It’s extremely humbling for Matthew to say this, considering that his fund has consistently beaten the market for the past 11 years. Yet, he still says it openly and it shows how much he cares for my followers and retail investors.
From this interview, I can absolutely feel the passion he has for his work and investing. I can’t wait to learn from him through his letters at Peterson Capital Management!
