Dennis Hong has emerged as one of the most talented young investors on Twitter and he has a lot to teach us.
If you have not listened and re-listened to Dennis Hong’s interview on Good Investing, you are missing a lot of gold investing nuggets. It’s not surprising that Dennis worked at Altimeter, because the message of Essentialism: The Disciplined Pursuit of Less, Brad Gerstner’s bible, is deeply evident in ShawSpring’s DNA.
Dennis is singularly focused on what he is trying to do: generate “hall of fame returns”. Everything he does is trying to solve for this. Everything he does is focused on maximizing the time and research effort expended in this pursuit.
He knew he needed mental models to efficiently filter through the tens of thousands of available public companies so he could fish in the very best pond, if not the very best barrel. But how to do this?
He found the usual heuristics that are bantered about on a daily basis – high quality, strong moats, etc. – too abstract and lacking in practicality. They perhaps raised as many questions as they answered.
So Dennis and his team spent an entire year coming up with a better mental model. In the spirit Stephen Covey’s 7 Habits, instead of plowing ahead, he stopped and sharpened his saw. The result was a refined process that focuses on aggregation businesses with “ecosystem control.” See the interview for details.
Needless to say, this focuses ShawSpring’s efforts on one of the fastest growing areas of the ongoing digital transformation of the global economy.
What are the lessons for all investors?
- Remember what you set out to do.
- Focus intently on process improvement.
- Know where the fish are and don’t stray.
- Have the fortitude and discipline to say no to distractions.