Takeaways from Latticework 2025: Bloomstran, Gayner, Miller, Robotti, Russo, Thomson, Tsai, Wachenheim
Theme: "Intelligent Investing in a Rapidly Changing World"
Last week Tyler and I had the pleasure of hosting MOI Global’s Latticework 2025 summit at The Yale Club of New York City. It was wonderful to see many of you and hear the featured guests’ thoughts on the market environment and high-conviction ideas. We are delighted to share the following highlights.
Latticework 2025 explored intelligent investing in a world of unusual and often contradictory crosscurrents. The market backdrop is one of bifurcation: a cap-weighted index propelled to new heights by a narrow cohort of tech giants, while many sectors of the real economy grapple with recurring inflation, geopolitical uncertainty, and the consequences of fiscal imbalances.
In fireside chats a set of interconnected themes emerged. Speakers highlighted the tension between secular overvaluation in popular segments and pockets of overlooked value elsewhere. They explored the importance of a long-term mindset, showcased the value-creation potential of aligned, entrepreneurial leadership, and provided a roadmap for discovering structurally advantaged niches that remain invisible to the broader market.
Let’s dive in.
Session 1: Tom Russo on Global Compounders
Replay this fireside chat and download the transcript.
The day began with Thomas A. Russo, Managing Member of Gardner Russo & Quinn, who called the current investment landscape “as weird as I can ever remember”. He painted a picture of a bifurcated market, where capital allocation seems divorced from traditional economic logic. He noted, for instance, that while Philip Morris (NYSE: PM) announced a $37 million capital project, the same day might see $350 billion allocated to AI-related spending, often financed through unconventional means like options rather than direct equity investment. This environment, fueled by vast sums of government money, creates a challenging backdrop that demands a disciplined, long-term approach rooted in the principles of Buffett and Munger: low turnover, a focus on the non-taxation of unrealized gains, and a search for businesses that possess both the “capacity to reinvest” and the “capacity to suffer”.
The Weetabix Case and the Power of Capital Allocation
To illustrate his core tenets, Tom presented a detailed case study of his firm’s investment in Weetabix, a UK-based cereal company they owned for 21 years. The company was a disciplined operator but had virtually no opportunities for internal reinvestment, as its consumer base was almost exclusively in England. Instead of pursuing value-destructive acquisitions, management simply allowed cash to build on the balance sheet. Over two decades, the investment compounded at 11.5% annually. However, Tom highlighted a crucial lesson: had the family-run company been comfortable using its accumulating cash to repurchase its own stock, the compound annual return would have been closer to 19%.
The “Capacity to Suffer”
Tom’s concept of the “capacity to suffer” is not about investors enduring poor returns, but about a management team’s willingness to absorb short-term earnings pressure to make crucial long-term strategic investments. The ability to do this is often a direct function of a company’s governance and ownership structure.
He provided a powerful negative example with General Mills (NYSE: GIS) and its Yoplait yogurt franchise. When a new competitor, Chobani, emerged, General Mills’ management identified the threat and knew that a $12 million investment could launch a competing product. However, they declined to make the investment because the expense would have jeopardized their ability to meet a near-term earnings pledge. By prioritizing the quarter over the decade, they ceded the market. Chobani (Nasdaq: CHO) went on to become a titan in the yogurt industry, and General Mills eventually sold the withered Yoplait brand at a fraction of its former value.
In stark contrast, Tom praised Alphabet (Nasdaq: GOOGL), which, from its IPO, instituted a dual-class share structure. This was explicitly designed to give its founders the freedom to pursue “moonshot” projects and absorb the associated losses without facing pressure from a short-term-oriented Wall Street. This governance structure institutionalized the capacity to suffer, enabling the long-term investments in areas like Android, cloud computing, and AI that drive the company’s value today.
Investment Ideas in a “Strange” Market
Spirits (a contrarian opportunity): Tom sees a classic contrarian setup in the global spirits industry. The sector faces headwinds, including a US Surgeon General’s warning about alcohol and a general consumer health trend. However, these negatives obscure long-term tailwinds. In China and India alone, 20 million new legal-drinking-age consumers enter the market each year. Storied brands like Jack Daniel’s from Brown-Forman (NYSE: BF.B) and Jameson from Pernod Ricard (OTC: PDRDF) have immense consumer loyalty and global reach. Furthermore, companies are adapting to health trends with non-alcoholic brand extensions, such as Heineken’s (Amsterdam: HEIA, OTC: HEINY) successful Heineken Zero. While the industry over-leveraged in a misguided attempt to gain pricing power over distributors, balance sheets are firming, and companies like Brown-Forman are initiating share buybacks.
Nestlé (a test of patience): The investment case for Nestlé (Switzerland: NESN, OTC: NSRGY) is a bet on the company’s ability to navigate challenges and return to its historical operational excellence. The company faces headwinds from the rise of GLP-1 weight-loss drugs, which could dampen food consumption. However, Nestlé is leveraging its formidable R&D capabilities to address this, developing a line of products to restore protein levels for GLP-1 users. The investment thesis rests on the belief that its vast global distribution, iconic brands in emerging markets (like Maggi noodles), and a renewed focus on its four founding pillars—innovation, renovation, communication, and cost management—will allow it to overcome recent underperformance.
Ashtead (a secular consolidator): The thesis for Ashtead Group (LSE: AHT) is a secular, not cyclical, one. The equipment rental industry is undergoing a long-term structural shift away from owned fleets toward leased ones. This trend is driven by increasing regulatory complexity and maintenance requirements, which are pushing small, mom-and-pop operators out of the business. Ashtead, as a major consolidator, acquires these smaller players and improves their efficiency by deploying technology like telematics for fleet management. This creates a long runway for growth as the industry continues to consolidate.
Session 2: Ed Wachenheim on Homebuilders, Contrarian Investing
Replay this fireside chat and download the transcript.
Edgar Wachenheim III, the legendary founder of Greenhaven Associates, presented an investment strategy of profound simplicity and power. His approach eschews macro-forecasting and short-term benchmarks, focusing instead on a repeatable, bottom-up process grounded in behavioral discipline and a two-to-three-year time horizon.
The Greenhaven Method and Behavioral Edge
Ed’s method is a masterclass in common sense. First, project what a company can earn under normal economic conditions two or three years in the future. Second, apply a reasonable multiple to those earnings, using the 65-year average P/E ratio of the S&P 500 (16.5x) as a baseline for an average-quality business. Third, only invest if the resulting target price offers the potential to double one’s money, providing a margin of safety. The crucial fourth element is having a variant perception—an original, well-researched concept that explains why the market is mispricing the stock.
This analytical framework is powered by a keen understanding of behavioral finance. Ed posits that our modern brains retain the DNA of our hunter-gatherer ancestors, making us inherently poor investors. We are wired to be short-term focused and overly emotional about perceived threats. He recounted the market crash of October 1987, when an emotional friend was panic-selling a stock at $7 that, just the day before, he believed was worth $14. This irrational, fear-driven behavior, Ed argues, is rampant on Wall Street and creates opportunities for the disciplined, long-term investor.
A Cautious Stance with Concentrated Conviction
Reflecting the market’s high valuation of 28x earnings, Ed revealed that Greenhaven holds a historic 45% cash position, finding few new ideas that meet its strict criteria. This cautious stance makes his deep conviction in one particular sector—U.S. homebuilding—all the more compelling. His portfolio is 30% invested in homebuilders, a concentration built on a structural, not cyclical, thesis.
The Bull Case for Homebuilders
Ed outlined a multi-faceted case for the major homebuilders, arguing that the market has failed to appreciate a fundamental transformation in their business model.
Structural Demand: The U.S. faces a chronic housing shortage of between two and four million units. Given the physical constraints on building capacity, this deficit will take a decade or more to close, providing a durable tailwind of demand.
Industry Consolidation: The industry has been steadily consolidating. Large, well-capitalized builders like D.R. Horton (NYSE: DHI) and Lennar (NYSE: LEN) are gaining share from smaller private players, leveraging economies of scale in land acquisition, procurement, and labor.
The Transformation to Asset-Light: This is the core of Ed’s variant perception. Historically, homebuilders were capital-intensive, asset-heavy businesses that tied up enormous amounts of capital owning land, often for years. This resulted in high debt and poor returns on capital. About a decade ago, led by D.R. Horton, the industry shifted its strategy. Instead of buying land, they began to control it through options. This seemingly simple change completely transformed the economic model. It freed up massive amounts of cash flow, which was used to pay down debt and fund aggressive share repurchases. The market, however, still seems to view these companies through the lens of their cyclical, asset-heavy past, failing to properly value the high-quality, recurring cash flow streams of the asset-light model.
Focus Idea: Lennar (LEN)
Ed identified Lennar as his favorite idea, as a temporary strategic misstep has caused it to lag its peers, creating an attractive entry point. He then provided a detailed, step-by-step valuation:
Revenue Projection: Lennar is growing its community count by 10% per year. Assuming a stable absorption rate, this implies they will be selling roughly 100,000 homes in 2027. At a normalized average selling price of $420,000, this yields $42 billion in revenue.
Earnings Projection: Applying a conservative 13.3% net margin (below the five-year average of 14.7%) to this revenue, plus another $600 million in profits from ancillary financial services, results in $6.2 billion of pre-tax profit.
Per-Share Calculation: After a 24.5% tax rate and factoring in an aggressive share buyback that should reduce the share count to 236 million, normalized EPS in 2027 should be ~$19.75.
Valuation: Applying a 16x multiple to these earnings—justified by the historical valuation of high-quality peer NVR (NYSE: NVR)—yields a target price of $315 per share, as compared to the recent price of $127.
Focus Idea: Oshkosh (OSK)
Ed also presented a thesis for Oshkosh (NYSE: OSK), a high-quality manufacturer of specialty vehicles like fire engines and garbage trucks. The investment opportunity was created when a spike in inflation compressed margins, as it was locked into long-term contracts without adequate price protection. That headwind is now turning into a tailwind. As those old, lower-priced contracts roll off, they are replaced by new contracts at higher prices that include inflation protection. Management is projecting EPS of $18 to $22 by 2028. Using the low end of that range ($18) and applying a 16x multiple suggests a target price near $290 per share, offering significant upside from its recent price of ~$135.
Session 3: Bob Robotti on Value in Neglected Industrials
Replay this fireside chat and download the transcript.
Robert Robotti, President of Robotti & Company, offered a powerful framework that marries a “grassroots macro” perspective with a deep-value, contrarian approach to investing in overlooked industrial sectors. His central thesis is that North America possesses a sustainable, multi-decade competitive advantage rooted in low-cost energy, a reality that is reversing decades of industrial offshoring.
The North American Advantage and the Virtue of Cyclicality
Bob’s core macro call is that cheap and abundant natural gas provides a durable cost advantage to North American manufacturing. This will fuel a long-term re-industrialization, driving secular demand for basic materials like steel, cement, and chemicals. This perspective informs his search for opportunities in businesses that the market has left for dead.
He champions a contrarian philosophy, arguing that the most fertile ground for investment is in industries where the business has “stayed bad as long as it did.” Prolonged downturns are cathartic; they force consolidation, eliminate weak players, and allow disciplined operators to acquire assets at fire-sale prices. This process can fundamentally transform an industry’s structure and future profitability. His firm’s highly successful investment in Builders FirstSource (Nasdaq: BLDR) is the prime example. They invested during the depths of the housing crisis, and the prolonged downturn allowed the company to consolidate the distribution industry, emerging as a much stronger and more profitable business than it was pre-crisis.
This leads to his focus on what he calls “zombie companies,” particularly within the Russell 2000 index. While many dismiss these non-earning companies as uninvestable, Bob sees a rich hunting ground for businesses with valuable assets trading at a fraction of their replacement cost, where consolidation has the potential to unlock latent earning power.
Investment Theses Driven by “Grassroots Macro”
Land Companies (the ultimate bottleneck): Extending the housing theme, Bob’s firm has invested in land development companies like Five Point Holdings (NYSE: FPH). His thesis is that the scarcest resource in the housing ecosystem is permitted, developable land. He views companies like Five Point as “value traps unchained.” After years of burning cash and being ignored by the market, they are now beginning to systematically monetize their irreplaceable land assets, generating enormous cash flows that are not yet reflected in their depressed stock prices.
Canadian Resources (unlocking global markets): Bob is bullish on Canadian natural gas and lumber producers. The thesis for gas producers is that new LNG export infrastructure connecting Canada’s west coast to Asia will be a game-changer. It will allow them to sell their vast, low-cost resources into the premium-priced Asian market, breaking their historical dependence on the discounted AECO hub price in North America. For lumber companies like Interfor (TSX: IFP), he sees a classic cyclical setup. Current low prices are forcing mill closures and reducing capacity. When housing demand normalizes, the lack of inventory and reduced supply will lead to a sharp spike in lumber prices and producer profitability.
Chemicals (follow the smart money): Bob highlighted the chlor-alkali sector, noting that Berkshire Hathaway’s recent acquisition of OxyChem signals deep value in the industry. He argued that publicly traded competitors like Olin (NYSE: OLN) and Westlake (NYSE: WLK) can be acquired in the public market for a fraction of the multiple Berkshire paid. The industry’s profitability is currently depressed due to China dumping excess product on the global market. However, this is a temporary headwind. The long-term, structural advantage for North American producers is their access to cheap natural gas feedstock, a cost advantage that will ultimately prevail and drive a powerful earnings recovery. This illustrates a clear causal chain: a durable macro advantage (cheap energy) creates a specific, actionable investment opportunity in an industry (chemicals) that is currently mispriced due to a temporary, cyclical headwind (Chinese dumping).
Session 4: Tom Gayner on the Architecture of Compounding
Replay this fireside chat and download the transcript.
Thomas S. Gayner, CEO of Markel Group (NYSE: MKL), provided a masterclass on building a corporate architecture designed for one purpose: “relentless compounding”. He detailed the three interconnected engines that drive Markel’s value creation and the unique culture, known as the “Markel Style,” that underpins the entire enterprise.
The Three Engines of the Markel Compounding Machine
Specialty Insurance: The foundation of Markel is its specialty insurance operation. By focusing on complex, niche risks that require deep intellectual capital—such as equine insurance—Markel builds durable competitive advantages. As Tom explained, it is far more effective to recruit “horse people” and teach them the discipline of insurance than it is to try and teach financial experts to care about horses. This engine’s primary output is low-cost, long-duration float—the premiums collected upfront that can be invested for Markel’s benefit before claims are paid out.
Investments: The second engine is the investment portfolio, which puts the insurance float to work. This began with a public equity portfolio managed with a long-term, ownership mentality. This strategy has resulted in a massive, tax-deferred unrealized gain of approximately $9 billion, which Tom describes as a “zero-cost loan from the government” that helps finance the group’s growth. Over time, this philosophy of ownership naturally evolved from buying minority stakes in public companies to acquiring majority stakes in private ones.
Markel Ventures: This is the third engine and the logical culmination of Markel’s evolution. Markel Ventures acquires high-quality private businesses with the intent to own them permanently. Tom draws little distinction between owning a public or private business; the key criteria are the quality of the business, the integrity of its management, and the ability to acquire it at a price that promises an attractive long-term return on capital. This structure provides a powerful solution to the classic investor’s dilemma of when to sell a great business. By having the capacity to own businesses forever, Markel avoids the forced realization of gains and the subsequent tax friction, allowing capital to compound on a pre-tax basis for far longer—the mathematical key to superior long-term returns.
Culture, Decentralization, and Capital Allocation
The entire system is held together by the “Markel Style,” a cultural statement that emphasizes a long-term perspective, discipline, and integrity. Operationally, Markel has been moving to decentralize authority and accountability to the front lines, empowering the experts in each of its 150 product lines to make decisions. This is supported by compensation systems that are tied to multi-year results, ensuring alignment with the group’s long-term compounding goal.
Capital allocation is a conscious and disciplined process. The first call on capital is always to reinvest in existing, high-return businesses. Subsequent options, in order of preference, are acquiring new businesses (public or private), repurchasing Markel’s own stock, and, finally, paying a dividend. Capital is always directed to its perceived highest and best use across the entire Markel ecosystem.
A Case Study in Curiosity: Brookfield
Tom illustrated his investment process with the story of how Markel came to be a long-term owner of Brookfield Corporation (NYSE: BN). It began nearly 25 years ago not with a stock screen, but with curiosity about an unusual Canadian tax structure. By working backward to see who had engineered this structure, he discovered the predecessor to Brookfield. He found a culture of intelligent, creative, and opportunistic capital allocators who were building a business by acquiring and operating essential, long-duration assets like hydroelectric dams. The investment was a bet on the people and their process. A quarter-century later, Markel remains a shareholder, demonstrating the power of finding the right partners and sticking with them for the long haul.
Session 5: Chris Bloomstran on Navigating a Secular Market Peak
Replay this fireside chat and download the transcript.
Christopher P. Bloomstran, President of Semper Augustus Investments Group, presented a sobering, data-driven analysis of the U.S. stock market, arguing that a confluence of factors has created a secular peak that rivals the great market tops of 1929, 1966, and 2000. His conclusion is that passive, cap-weighted index investors face a decade or more of low single-digit returns, making active stock selection more critical than ever.
Peak Margins, Peak Multiples
Chris’s argument rests on two pillars: unprecedented corporate profitability and extreme valuations.
The Margin Story: For decades, as Warren Buffett noted in 1999, S&P 500 net profit margins were remarkably stable, oscillating in a range between 4% and 6.5%. However, a unique combination of factors in the 21st century—the rise of capital-light technology businesses, a secular decline in interest rates, and a significant cut in the corporate tax rate—drove margins to an all-time high of 13.3% in 2021. Chris’s core thesis is that this level is unsustainable and likely represents a secular peak.
The Valuation Story: This peak profitability is being capitalized at a peak multiple. The S&P 500 currently trades at 27 times earnings. This is skewed by the “Magnificent Seven” (substituting Broadcom (Nasdaq: AVGO) for Tesla), which trade at a collective 36-37 times earnings. Even excluding this cohort, the remaining 493 stocks in the index trade at 21-22 times earnings—still significantly above the long-term historical average of 16.5x.
The AI Capex Bubble and the Macro Debt Problem
Chris identifies the current AI investment boom as the primary driver of the market’s excess and a direct threat to the high margins of technology companies. He draws a parallel to the fiber-optic bubble of the late 1990s. Today, hyperscalers are spending an estimated $350-400 billion per year on AI-related capital expenditures, while generating less than $40 billion in corresponding revenue. The math is starkly unfavorable. As this massive capex begins to depreciate over the next several years, it will introduce hundreds of billions of dollars in new costs to the income statements of these formerly “capital-light” businesses, putting immense downward pressure on their celebrated profit margins.
This market-specific risk is compounded by a broader macroeconomic problem: debt. With total U.S. credit market debt now at 350% of GDP, Chris argues that the nation has crossed the threshold where leverage becomes a drag on economic growth. He points to the fact that real GDP per capita growth has been halved from its long-term 2% trend to just 1% over the past quarter-century. A slower-growing economy, he contends, should command a lower long-term valuation multiple, not a higher one.
The Stock Picker’s Response
Chris’s bearish top-down view is not a call to retreat to cash, but rather a directive to actively seek value in the areas of the market that the current mania has neglected. The market’s obsession with a single theme (AI) creates mispricing and opportunity elsewhere.
Focus Idea: Deckers Outdoor (NYSE: DECK): This high-quality, fast-growing consumer brand company saw its stock get punished due to market fears over a potential new tariff policy on goods imported from Vietnam, where 85% of its manufacturing is based. This overreaction allowed investors to buy a business with a pristine net-cash balance sheet and a powerful growth engine—the Hoka running shoe brand is growing at over 20% annually—for just 13x earnings. While the market chases AI narratives at 37x earnings, a tangible growth story became available at a deep discount because of a political headline.
Contrarian Cyclicals: Echoing Bob Robotti, Chris also sees value in out-of-favor cyclicals. He used the recent sharp sell-off in Olin (NYSE: OLN) to increase his position, buying the stock at a deep discount to its mid-cycle cash flow potential. He also maintains a position in gold miners like Kinross Gold (NYSE: KGC) as a pragmatic hedge against fiscal and monetary indiscipline, though he has been prudently trimming the position after its significant run-up.
Session 6: Christopher Tsai on Great Leaders, Finding the Next Multi-Bagger
Replay this fireside chat and download the transcript.
In a session that provided a compelling counter-narrative to the prevailing market caution, Christopher Tsai, President of Tsai Capital, outlined his framework for identifying the next generation of multi-bagger stocks. Dubbed “Value Investing 3.0,” his approach moves beyond traditional valuation metrics to focus on visionary, founder-led companies that are building the dominant ecosystems of the future.
From Cigar Butts to Visionary Compounders
Christopher framed his approach as the next stage in the evolution of value investing:
Value 1.0: Benjamin Graham’s “cigar butt” investing—buying statistically cheap assets for less than their liquidation value.
Value 2.0: Charlie Munger’s pivotal insight—it’s better to buy a wonderful company at a fair price than a fair company at a wonderful price.
Value 3.0: An approach for the modern, software-driven economy. This involves investing in companies with massive addressable markets that are intentionally depressing current GAAP earnings to make heavy, high-return investments in technology and market share. These investments create enormous future intrinsic value that is invisible to static valuation multiples like the P/E ratio.
The archetypal example is Amazon (Nasdaq: AMZN) in 2015. The stock traded at a seemingly insane 500x earnings, yet in retrospect, it was a generational buying opportunity. The market’s “water,” as Christopher puts it—the ingrained heuristic of the P/E ratio—prevented most investors from seeing the immense value being created by the company’s investments in AWS and logistics. A key tenet of this philosophy is that durable economic moats are not something you find; they are something that is built over years of visionary leadership, a unique culture, and disciplined reinvestment.
Backing Visionary Leaders
Christopher’s process is centered on identifying and backing exceptional founder-owner-operators. He highlighted two current examples.
Brad Jacobs and QXO: Christopher is a significant backer of serial entrepreneur Brad Jacobs’ latest venture, QXO. Jacobs’ playbook is to acquire a platform company in a large, fragmented industry and use it as a vehicle for consolidation. With QXO, he has acquired Beacon Roofing Supply (Nasdaq: BECN) as the platform to roll up the $800 billion building products distribution industry. Jacobs’ strategy is to professionalize operations, drive margin expansion, and use QXO’s public stock as a highly-valued currency to acquire smaller, cheaper private competitors. Christopher believes Jacobs can deploy capital at 30-40% IRRs and will consolidate the industry much faster than Wall Street expects, potentially raising another $5 to $7 billion in equity within the next six to nine months to accelerate the pace of acquisitions.
Elon Musk and Tesla: Christopher presented a bullish long-term thesis for Tesla (Nasdaq: TSLA), a stock his firm has owned since 2020. He argues the market is making a categorical error by valuing Tesla as a car company. The true thesis—”Tesla 2.0”—is that the company is a software and AI powerhouse. The existing fleet of 8.5 million vehicles constitutes a massive installed base, analogous to the iPhone ecosystem. Tesla’s next phase of exponential value creation will come from selling high-margin software, primarily its Full Self-Driving (FSD) subscription, onto this network. He believes Tesla has a commanding lead, owning roughly 80% of the autonomous vehicle market. Like Amazon in 2015, Tesla’s heavy R&D spending penalizes current earnings but is building a durable, quasi-monopolistic position for the future. On a risk-adjusted basis, Christopher views Tesla as the most undervalued company in his portfolio.
This session crystallized one of the central debates in modern investing. While a top-down analysis of aggregate AI capital spending may suggest a bubble, a bottom-up analysis of a specific, dominant player may reveal a generational opportunity. An investor’s returns in the coming decade may well depend on which of these perspectives proves correct.
Session 7: A Deep Dive into Search Funds, with Kingsway Financial
Replay this fireside chat and download the transcript.
In a session hosted by Scott Miller of Greenhaven Road Capital, the audience was introduced to a niche but remarkably successful investment strategy: the search fund. The session featured JT Fitzgerald, CEO of Kingsway Financial Services (NYSE: KFS), and Adam Patinkin, Managing Partner of David Capital Partners and an activist investor in the company. They presented Kingsway as a unique, publicly traded vehicle for investors to gain access to this high-returning asset class.
The Search Fund Model: A Structural Anomaly
A search fund is an investment vehicle where an entrepreneur raises a small amount of capital from investors to fund a search for, and subsequent acquisition of, a small, profitable operating business. These target companies typically have $1 to $4 million in EBITDA and are being sold by a retiring founder.
The model’s success is rooted in a structural market inefficiency. These businesses are too small to attract the interest of traditional private equity firms, for whom a small deal represents a poor return on time. Furthermore, the imminent departure of the founder-operator creates a succession problem that most financial buyers are unwilling to solve. The search funder—a talented, ambitious, and energetic individual—is the “uniquely shaped key” that fits this specific lock, providing both capital and a successor CEO in a single package.
The historical returns have been extraordinary. A long-term study by Stanford University, which tracks the performance of the asset class, found that an investor who had invested pro-rata in every search fund ever formed would have achieved a compound annual IRR of 35% over three decades.
Kingsway: Institutionalizing the Search Fund Model
JT, who began his own career as a search funder, has spent the last several years transforming Kingsway from a failed insurance holding company into a “search fund accelerator.” The Kingsway platform is designed to institutionalize the search model and mitigate its key risks.
De-risking the Process: Kingsway provides its hand-picked Operators-in-Residence (OIRs) with a suite of resources that an independent searcher lacks. This includes a proprietary deal-sourcing infrastructure, deep underwriting expertise, superior financing terms from banking partners, and, crucially, post-acquisition operational support. This support is delivered through the “Kingsway Business System,” a set of playbooks inspired by the famed Danaher Business System (DBS). The OIRs are advised by a board that includes former Danaher CEO Tom Joyce and The Outsiders author Will Thorndike.
The Public Vehicle Advantage: As Adam explained, Kingsway solves the primary problem for investors wanting to access this asset class: scalability and liquidity. Instead of writing a series of small, illiquid, 15-year-lockup checks, investors can simply buy a publicly traded stock. This structure provides daily liquidity with no double layer of fees. The investment case is further enhanced by Kingsway’s legacy: over $600 million in Net Operating Losses (NOLs), which will shield the cash flows from its profitable operating companies from federal taxes for years to come.
After a successful proof-of-concept exit—a home warranty business called PWSC that returned 10 times the original equity investment in four and a half years—Kingsway is now scaling its platform. It currently owns 15 businesses, focusing on sectors with recurring revenue like B2B services, vertical market software, and skilled trades, where it is executing a buy-and-build strategy in the plumbing industry. Kingsway represents a compelling synthesis of public and private market strategies, using a liquid public currency to execute a proven, high-return strategy in an inefficient corner of the private market.
Session 8: The FNX Playbook 2.0 with Magna Mining
Replay this fireside chat and download the transcript.
The final session of the day, hosted by William M. Thomson of Massif Capital, provided a fascinating micro-cap case study that exemplified many of the day’s themes: entrepreneurial leadership, acquiring undervalued assets, and executing a repeatable, value-creating playbook. Jason Jessup, CEO of Magna Mining (TSXV: NICU), detailed how he is re-running the strategy that led to the legendary success of FNX Mining in the 2000s.
The FNX Playbook: A Low-Risk, High-Return Mining Strategy
The “FNX playbook” is an elegant and capital-efficient strategy for value creation in the mining industry, specifically tailored to the unique characteristics of the Sudbury Basin in Ontario, one of the world’s most prolific mining districts. Jason was a key operations manager at the original FNX, which acquired five written-off mines from mining giant Inco in 2002 and grew into a multi-billion-dollar company over the next decade.
The strategy is as follows:
Acquire Non-Core Assets: Identify and acquire fully permitted, past-producing mines from major global mining companies like Vale and Glencore. For these giants, smaller Sudbury assets are often non-core distractions, and they are unwilling to allocate the modest capital required to maintain or expand them.
Leverage Existing Infrastructure: Sudbury is home to a vast network of existing infrastructure, including nine operating mines, two large processing plants, and two smelters. By acquiring mines that can tap into this network, Magna avoids the multi-billion-dollar capital expenditures and decade-long permitting processes required to build a new mine from scratch.
A Simple Business Model: Magna’s model is to simply mine the ore and sell it directly to Vale’s or Glencore’s underutilized processing mills. This allows for rapid restarts and a focus on operational excellence rather than capital-intensive construction.
Self-Funded Growth: The cash flow generated from the first restarted mine is then reinvested to bring the next mine online, creating a self-funding growth engine.
Magna’s Flawless Execution
Jason founded Magna in 2016 with this vision. His acquisition history is a testament to the strategy’s power. He started by buying his first property for just $50,000 in cash. This culminated in the acquisition of the original FNX properties from KGHM in early 2025. In a transaction that was eight years in the making, Magna acquired assets with a replacement cost in the hundreds of millions of dollars for just $5 million in cash and $4 million in stock and deferred payments.
The company is now executing its growth plan. Over the next three years, it intends to bring three mines into production, funded largely by internal cash flow. This has the potential to generate $100 to $200 million in annual cash flow for a company with a current market capitalization of approximately $600 million. The strategy is also flexible; the unique geology of Sudbury allows Magna to pivot between mining copper-rich or nickel-rich zones depending on which commodity offers better economics. The entire enterprise is led by Jason, an entrepreneurial CEO with deep operational expertise and significant skin in the game, owning approximately 5% of the company.
Magna Mining serves as a powerful real-world example of the search fund model applied to a specific industrial niche. Jason is the expert operator with a specific thesis, and the major mining companies are the “retiring founders” who view these smaller assets as non-core. It is a textbook case of creating value by exploiting a structural inefficiency that is ignored by larger players.
The content of this website is not an offer to sell or the solicitation of an offer to buy any security. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment, or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information set forth on this website. BeyondProxy’s officers, directors, employees, and/or contributing authors may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated herein.
 | A guest post by
|
Looks wonderful!