Investing Advice From Robert Vinall, A Little-known Investing Expert

Robert Vinall may not be a name that rings a bell with many investors. Yet, his investing performance certainly warrants some attention. His fund, Business Owner TGV, has produced a mouth-watering 649.6% total gain since its inception in late 2008. That translates to a 19.6% annualised return, easily outpacing the MSCI World Index’s 9.47% annualised return over the same period.

I recently spent a few hours reading some of his writings on investing and his investment philosophy to gain some insight on how he managed to achieve these amazing returns.

He invests like a business owner

As the name of his fund suggests, Vinall invests as though he owns the businesses that he invests in. He says:

“My philosophy can be summed up as: Investing like an owner in businesses run by an engaged and rational owner with the capital of investors who think like an owner.”

But what does thinking and acting like a business owner really entail? In essence, it means ignoring short-term movements of share prices, and putting greater emphasis on buying great companies that can compound value over time.

Vinall is, therefore, comfortable with buying shares that (1) have a troubled short-term outlook but have solid long-term prospects, (2) have no near-term price catalysts or (3) is shunned by Wall Street analysts.

Because of the above, he is able to buy shares that Wall Street has ignored, giving him a great entry point on what he believes are long-term compounders.

In addition, he also looks for business managers who act like business owners. Shareholder-friendly managers focus on long-term steady results, rather than near-term share price movements. 

He looks for four key things in a company

To determine if a stock is worth investing in, Vinall looks for four key characteristics in a company:

1. It is a business he understands
2. The business is building or has a long-term competitive advantage
3. The managers act with shareholders’ interests at heart
4. The share price is attractive

Using this framework, Vinnal has found investments that have compounded meaningfully over time.

Although the framework is simple it is by no means easy. Vinall points out:

“An investment process which consists of four steps, each of which has a “yes” or “no” answer may sound simple and indeed it is. This is because the best capital allocation decisions are typically made at moments of extreme market distress. To operate effectively in such an environment requires a process which is robust and simple to administer.

However, each capital allocation decision is preceded by months of research and often years of waiting for the right price to come along.”

He has a concentrated portfolio

Some of the best investors such as Warren Buffett, Chuck Akre, and Terry Smith prescribe having a concentrated portfolio and Vinall is no different.

As of January 2020, Business Owner TGV only had 10 stocks in its portfolio. That’s a heavily concentrated portfolio when compared to most other funds.

A concentrated portfolio of high-conviction stocks gives investors a better chance of market-beating returns. In his 2019 letter to shareholders, Vinall noted that he had dinner with legendary investor Charlie Munger at his home. Over the course of dinner, one of the topics that came up was how concentrated an investment portfolio should be. 

Vinall wrote:

“His (Munger’s) bigger point was that the truly exceptional opportunity only comes along a few times in a lifetime. When it does, the important thing, according to Charlie, is to: ‘use a shovel, not a teaspoon’.” 

He believes it’s always better to be invested than on the sidelines

With recession fears looming, investors today are asking whether it is a good time to invest.

Vinall believes there are two faulty assumptions underlying this question. The first faulty assumption is that the stock market gyrates around the same level. On the contrary, developed markets should increase at around 6% per year which translates to around an 8-fold increase over 48 years. 

Vinall wrote:

“If you have a 40 year plus time horizon and an investment opportunity that will go up 8-fold, how much is there to think about? The smart money is invested, not on the side-lines fretting about what to do.”

The other flawed assumption is that investing is easy. Investing is never easy, as most successful investors will tell you. As such it is not as simple as asking whether now is a good time to invest. 

Vinall explains:

“In my experience, good investment opportunities are always plentiful. The limiting factors are the ability to identify them and, having identified them, the courage to act.”

The Good investors’ conclusion

Vinall has been one of the top-performing investors of the last decade. His fund’s return speaks for itself. Vinall is also an exceptionally generous investor who is willing to share his investing insights, philosophies, and success stories. I strongly encourage you to read more of his writings which can be found here.

Disclaimer: The Good Investors is the personal investing blog of two simple guys who are passionate about educating Singaporeans about stock market investing. By using this Site, you specifically agree that none of the information provided constitutes financial, investment, or other professional advice. It is only intended to provide education. Speak with a professional before making important decisions about your money, your professional life, or even your personal life.