Ran into this Real Vision interview of Tony Deden from a thread by Pomp on twitter a few months ago. It’s quite long (2hrs and 30min) but there are some amazing gems, particularly on long term thinking, value preservation and independent mentality.
Tony is the founder of Edelweiss Holdings, an investment company with the mission to preserve capital for the long term with a unique approach. He landed in the industry by pure serendipity, recommended by one of his mentors. Through the years he realized the traditional way of managing money (balanced portfolios) was pure madness and convinced all his clients to change to a single mandate: Preserve capital but with a long term investment horizon.
Key trait is to invest irreplaceable capital into irreplaceable assets.
When referring to the dot.com era he mentions: “Prices of securities were going up regardless of economic activity mainly in the U.S.” (sound familiar?). After a confidence struggle, he takes time to retrace his steps and decides to sell tech stocks and buy unwanted assets – Oil, gold, copper, silver, coal and German bonds.
Through the years, Tony has managed to mold his investment principles around:
1. Scarcity – the most important law in economics
2. Permanence – a framework made to endure over long periods of time
3. Independence – the world is more interconnected than ever, there is value in not depending on others for your business
Ideas and learnings:
- Only has an investable universe of around 150 companies. Know what you don’t want to invest in. Now only 28 positions and makes 1-2 investment decisions per year
- Distinction between owner and investor mentality. Owners are unconcerned about the daily price of their business but rather focused on its survival and growth in the future
- Clients and investments share likeminded values – destination is the real objective: get there safe and wealthy, not how fast or how many turns you make
- Focus on balance sheet endurance (low leverage) and cash generation in target companies. U.S. focuses on growth vs. Europe more on risk mitigation
- Once you lose faith in management – get out. Sadia example where management changed focus from chicken production to FX optimization. Sold immediately
- Biggest investment mistakes have come from poor judgement of people
- Obsessive about survival of his business and investments. Manage money for others as if it were your own savings
- 35% of the company assets in gold (2018), it’s how he manages his liquidity. Traits of scarcity, permanence and independence vs. financial system
- Runs Edelweiss as a holding company (similar to Berkshire) with the potential to be public someday, although mentions the shares have “little trading volume”currently
There is not a lot of information on his firm but did manage to get an old performance graph and key holdings from his website (was taken down).
Value investors like Tony have been out of favor for quite some time given the growth mentality in recent years. His comments around the dot.com era sure have a similar tune to the current tech optimism driven by monetary/fiscal policy. I definitely feel it is a good time to take a step back and think about how companies can achieve scarcity, durability and independence. It sure makes the most sense as a manager and owner of a business!
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