Deep-Value Business Investor
I manage my own capital alongside family, friends and a small number of professional investors.
About
I'm a deep-value business investor from the UK. I live in Staffordshire with my partner and two small children.
I launched my first business in 2003 and sold it to a competitor in 2006. I entered the financial industry in 2008 as a professional currency trader, and later transitioned my currency-trading businesses into investing into SME businesses on the private market.
Today, I continue to buy and sell businesses, but I use the stock market instead.
This solves many of the issues I faced when dealing with private owners directly. Sourcing deals was laborious, as was negotiating a price with the founder or current owner-manager of the target company.
Even after a deal is done, almost all smaller, private businesses require hands-on management in one way or another. This inevitably sucks up time and focus.
These became major obstacles to my goal of scaling up the enterprise over time.
The stock market, on the other hand, allows you to buy and sell businesses in the same manner without all these obstacles.
For example, sourcing deals is extremely easy. Every listed company provides all of their financial information in neatly organised, easy to navigate statements that are published regularly.
There is no price-negotiation. The stock price is set, automatically, via an auction-like process between buyers and sellers. Finally, listed companies require zero input or management of their day to day operations.
Each one, comes with a complete management team in place.
There are other advantages too:
Buying private businesses is generally only worthwhile (or possible) if you buy the whole enterprise. This often includes using debt to finance the acquisition, with great personal risk.
Publicly listed companies can be bought in fractions, based on the cash available, and this can be conducted with zero debts or leverage (or the inherent risks of those things).
The market acts as both buyer and seller. This means that it's possible to sell your stock at any time, even illiquid stocks enjoy a huge buy/sell advantage compared to the totally illiquid private market.
Of course, there are a couple of downsides too...
Firstly, the current price is non-negotiable. You either pay it or ignore it. This can be frustrating if you are heavily attracted to a particular business, but the price is incredibly expensive.
Or, if the price you initially paid is well below the current price offered by the market.
As with most things in life, a very cheap initial price (relative to the underlying business value) and lots of patience usually resolves this issue.
Secondly, most of the value you unlock from an investment is tied to the gyrations of its stock price. If the market doesn't rerate the stock, then it's difficult to generate a profit.
There are a few caveats to this. For example, dividends can be a source of huge returns when a stock is priced cheaply enough to increase the dividend yield to double-digit percentages or more.
Overall though, It's hard to be too frustrated over this factor when it's also the source of such phenomenal opportunity.
Generally speaking, when stocks become 'deep-value' opportunities, it attracts many different types of catalysts (buyouts, turnarounds etc) that simply didn't exist with a higher price.
This results in many different opportunities for the market to recognise the true value of a business, especially at deep-value prices.
Overall, the stock market, and the deep-value approach in particular, offer the most efficient pathway to buying and selling businesses in a scalable manner, I've ever seen.
Plus, I absolutely love the work of quietly researching and uncovering bargains.
Work With Me
I'm currently a partner at Deep-Value Capital Management LLC. I'm responsible for all idea generation and investment research along with managing the model portfolio of the firm.
If you're interested in learning more about becoming an investment partner, you can learn more here.
If you're an activist investor or part of a company-management team, I'm also open to working together on buyouts or other activities that can unlock shareholder value.
I operate only as a 'friendly-shareholder' and avoid hostile takeovers or activist campaigns.
If you work in the media (online or mainstream), please feel free to contact me about interviews or similar collaborations.
The best email is support@jarrattdavis.com.
Contact: Support@jarrattdavis.com