Finding Decade-Long Compounders with Joseph Shaposhnik

In this episode of Excess Returns, Joseph Shaposhnik, founder of Rainwater Equity and former portfolio manager at TCW, discusses his investment discipline, focusing on quality as a strategy and adapting to changing market dynamics. He emphasizes the importance of investing in businesses with recurring revenue, strong leadership, and the potential for long-term growth, drawing lessons from investors like Warren Buffett and Bill Miller. Shaposhnik highlights the significance of free cash flow, the dangers of over-diversification, and the need to avoid sectors where companies cannot control their destiny. He also shares insights on identifying "fanatic" management teams and the importance of aligning incentives to drive equity value, advocating for a concentrated portfolio of high-conviction, durable assets.