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Systems Capital Investment Philosophy
Our founder, Eric discusses the organization’s investment policy, and how we utilize our own data for investment management.
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Executive Summary
As a general principal, we take a long position on the world. We believe the good parts of the world are becoming more prominent, and the bad is becoming more phased out. Sometimes, there are points where companies may be facing tumultuous times, but such is the way of life. As business owners, we combat this by investing with good people for the long-run. In our experience, this makes the bad times not so bad, and the good times even better. Our systems approach to collecting data allows us to identify these great companies early, and we share our findings publicly so that other managers may gain deeper insights of investment markets.
Our investment style is to keep a concentrated portfolio and swing with the full weight of our capital when something's right in our strike zone. Until that opportunity appears, we hold our funds in a treasury strategy primarily consisting of fixed-income instruments and gold.
Background
Systems Capital was founded through Eric’s personal portfolio that he grew from funds he earned while working in kitchens and food trucks throughout his university degree. Eric is currently growing Systems Capital on a part-time basis while working full-time in Treasury Mangement. This website, and it's contents are "living", and are updated regularly. Our data is meant to serve investor needs for high quality, reliable, cleaned data, and we are currently using this product to fundraise enough money to launch a limited partnership structure so that Systems Capital can act as a General Partner for our network of investors. We do not currently offer any securities or invest any money beyond our own.
Investment Approach
We manage our capital in the same fashion as many great institutions have prior to us. Berkshire Hathaway, Himalaya Capital, and many of world’s largest university endowments, among others, have been a large inspiration for our capital management style. Through these inspirations, we’ve distilled 3 major learnings that we keep as core values for our investments.
1. Great investments start with people, and great businesses are made up of great people.
2. One must understand all there is to know about the business to effectively evaluate the direction which it is headed.
3. And as investors, we are business owners.
We invest in a long-only buy-and-hold strategy using a Ted Williams approach for investing - meaning that we look for opportunities right in our wheelhouse, and when we swing (i.e. invest), we swing with the full strength of our capital.
We are experts in data, but our investment review largely relies on fundamental analysis, people, and economic moat anlaysis. As data experts, we utilize modern data retrieval techniques for analysis, and we analyze companies en-masse. When we find the right company, we deploy our capital and expect the company to be in our portfolio for the long-run.
We don’t necessarily put too much weight into one data point such as our statistical indicators or our forecasts, but as systems analysts, we analyze the full system in which the company is operating. For example, when we see a company who is settled into a competitive position in their industry, showing year over year improvements in their books, and has a rising median return, these are indicative of a strong investment, and that company deserves further review for investment potential.
Data Approach
We believe the field of systems dynamics has historically had an underutilized influence on investment management practices, and we believe, and have proven through our investment returns, that there is an incredible opportunity for managers to apply this field directly to their practice.
Strong business systems create strong companies, and strong companies are strong long-term investments.
We hope our data and research enables others to make strong choices within the market, and we strive to make Systems Capital serve as a strong educational resource for all investors, regardless of their preferences.
Current Investments
As Systems Capital is currently focused on fundraising, much of our current investments are consolidated into strong companies that are emerging as next generation leaders of their respective field. However, Systems Capital does not currently disclose portfolio performance publicly, but we are working with our administration team on how best to disclose portfolio actions.
We do distribute performance reports and operational updates quarterly to our investment network via email, however. If you’d like to enter our investment network and receive quarterly updates, such as when we will begin accepting outside capital, please fill out our form on our about page and let us know you’d like to stay updated.
Our core equity portfolio is our primary focus, but we also have holdings in fixed income instruments and commodities for our treasury needs.
Reading List
Below are some recommended readings that helped shape Systems Capital's investment philosophy.
● Forrester, J. W. (1961). Industrial Dynamics. MIT Press.
● Sterman J. (2000). Business dynamics. Irwin/McGraw-Hill
● Williams, T., & Underwood, J. (1971). The Science of Hitting. Simon and Schuster
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