GoodHaven Interview: (Try To) Make As Much Money As You Can, Without Taking On Lots Of RiskVW Staff
Larry Pitkowsky and Keith Trauner, Co-Founders, Managing Partners, and Co-Portfolio Managers, GoodHaven Capital Management & the GoodHaven Fund
Larry Pitkowsky: Keith and I started our firm and the GoodHaven Fund to capitalize on our prior success and take advantage of our decades of experience in value investing. We approach investing in a businesslike manner and spend our time trying to find bargains –investments where we think we’re getting a lot more value than we’re giving. In simple terms, we’re trying to make as much money as we can, without taking on lots of risk.
Wally Forbes: Sounds like a good combination.
Pitkowsky: Well, we are significant personal investors in the fund and that should be important to our shareholders. If we’re not willing to own a security personally, we won’t buy it for our fellow shareholders. As one of us likes to say, “Avoiding all losses is impossible, but it is a worthy goal.” So the GoodHaven Fund is set up to concentrate our investments in our best ideas – what we think is the best combination of risk and reward. They are primarily, equities. But we will also invest in other types of securities from time to time. We look at equity, debt, big companies, small companies. That includes those that trade inside the United States and those that trade outside the United States.
So we’ve got a lot of flexibility. We tried to create a structure that would let us go wherever we see good value. Also, we are opportunistic and believe it is not necessary to be fully invested at all times. If bargains are scarce, we’ll hold more cash or investments we think are less sensitive to general market fluctuations. Sometimes that’s a significant percentage of the portfolio. That said, we wake up every day and keep searching diligently. We only need to find a couple of things to do each year to make a difference and generate attractive, risk-adjusted returns for our shareholders and ourselves.
Keith Trauner: We’re approaching the fund’s three-year anniversary. And our executive summary is: so far, so good. We’re up about 15% per annum through the end of last year, which is similar to the market since we started. But we’ve probably averaged about 25% cash during that period. And we believe our portfolio has less risk than the overall market. We believe it has also materially outperformed most hedge funds over that period of time.