Hello World!

What am I trying to accomplish?

Panoramic Capital has three primary long term objectives

1. To own a diversified group of competitively advantaged businesses going through abnormal growth periods, at prices that significantly undervalue their future potential.

2. To engage with portfolio companies in a meaningful way.

3. To find a community of like minded investors.

Wait… what about returns?

Note that “maximizing investment returns” is not one of the primary objectives listed above. Never fear, this is not a charity. Generating solid returns over a long period is a baseline requirement for any investment vehicle, and in this case, my survival depends on it as I will be living off the returns generated from this vehicle.

However - my experience on the buyside has taught me that chasing returns can be very counterproductive. I’ve met many portfolio managers who spend an enormous amount of time and effort trying to out-guess the quarter, attempting to bottom tick every trade, and living in fear of a drawdown. This can happens even if you have a “long term mindset/orientation.” As soon as you get into the mindset of maximizing returns, the brain will automatically hone in on what gets measured.

Of course, the opposite end of the spectrum - where you ignore returns altogether - can be just as damaging. 2021 was such a period, where many managers focused solely on the “fundamentals” and hoped that the price would “take care of itself.” Oops.

My solution to this conundrum is to have a simple minimum returns mandate which I must meet¹:

• Minimum hurdle: 10% IRR or MSCI World Small Cap, whichever is higher.

• Target: 15% IRR or MSCI World Small Cap + 5%, whichever is higher.

• Time period: rolling 5 year periods.

In case the difference is not clear - let me reiterate: the goal of Panoramic is not to maximize my wealth. It’s to fund my lifestyle while allowing me to spend my time doing what I love - finding interesting small/microcap companies, and witnessing their growth journey over multiple years. This has certain portfolio management implications, which I will detail in a separate post.

What kind of opportunities am I looking for?

I am looking for companies that are going through a special period of growth. Companies with a specific opportunity in front of them and a clear plan to execute it. While there is no specific number in mind, you can assume 10-15% profit growth per annum as a minimum hurdle required to quality as "special."

The opportunity usually comes as a result of one of five different archetypes:

• Monopoly/oligopoly on an industry tailwind.

• Product or business model that offers an advantaged value proposition, leading to market share gains.

• Improving monetization/pricing, often coming from an improved value proposition.

• Opportunity to optimize or restructure corporations, leading to margin expansion.

• Companies with an opportunity to deploy capital at high incremental returns.

In addition to having clear growth drivers, companies will need to meet minimum quality hurdles, or have a clear pathway to building a defensible business down the road. Required attributes include:

• Companies that provide valuable products or services that are needed or wanted.

• One of: 1) benign competitive landscape, 2) customer acquisition advantage or 3) strong customer retention dynamics.

• Low dependence on capital markets.

• Companies with robust business models that can withstand shocks and disruptions.

• Companies with rare and difficult to replicate assets.

How will I engage with our portfolio companies?

As a small investment firm operating in public markets, my opportunity to engage with companies will be severely limited - at least to start. Securities regulation limits when management teams can talk to public shareholders, and what they can say when we meet.

However, my end goal is to evolve Panoramic Capital to be more than just a “stock picking operation.” Not that there is anything wrong with stock picking - but I am interested in getting a full experience in how companies operate and grow. It’s my long term ambition to be able to act as a strategic, cornerstone investor that can help management teams execute their strategy with full confidence.

TBA on this one.

What do you mean by “a community of like minded investors?”

The vast majority of funds out there are no more than just financial instruments, owned by investors who view it as a means to an end - generating returns.

As discussed in the returns section, Panoramic is not a financial instrument. My wish is to develop a roster of self-selected partners that are interested in a specific type of experience. Having this group of committed and engaged partners, with a clear understanding of the firm’s underlying thesis will be an enormous advantage.

This is the primary reason for me creating this substack. I hope that putting my writing out there will help me find this group of like minded investors.

Please consider subscribing if you are interested in following my journey.

Onwards!

[redacted.]

1. In case you were curious as to how I arrived at these numbers, it’s simply the return profile I need to fund my living expenses, + a margin of safety.