IP was the first asset manager in Brazil to write detailed reports and make annual investors meetings, back in the early 90s. That was then.
With this site we aim to show potential investors and investees a “live” window into most of what we look at and how we think. We hope it will spark connections with the right people over time, in an efficient way. Risk is much more about knowing very well who you’re dealing with than it is about greek letters.
At IP we seek to fight our structural cognitive limitations acting with discipline and dedication in 4 fronts:
1) Investing our attention in the acquisition of “frameworks”, “mental models”, “vocabularies” and information of several disciplines, industries, companies, geographies, business models, vehicles and investment structures.
These resources form a tacit knowledge mosaic that: a) creates context(s) for us to understand and organize the innumerable stimuli we receive, helping distinguish what is relevant and what is not; b) functions as a repository of information with potential to be used in the future; c) encourages our creativity, providing us with perspectives and starting points different from the “average view” for everything we do.
- With this blog, we’re trying to show you some of the results we get from this highly-focused, obsessive search for an informational and ultimately analytical edge.
2) Building up and developing a local, national and international “intelligence network”.
According to our experience, it is not very “wise” to leave out of consideration, in a strict process of evaluation of investments, the input of people who know much more than you about some key points of your analysis. A tiny, single judgment error can jeopardize a whole investment thesis.
Sure, many times some of the marginal knowledge required is indeed in-house: for example, we have among partners and employees, specialists in governance, regulation, structuring of deals, marketing, commercial, information technology and operations, which assist upon demand the analysts of all sectors in their projects. Each partner of IP has a set of functional expertise and abilities that add value to the group.
However, there are also thousands of formal and informal specialists spread throughout Brazil and worldwide. They are former company administrators, regulators, shareholders, investors, consultants. They are very useful on several manners: as independent source of information on companies, people background checks (administrators, shareholders), as ‘devil advocates’, for specific aspects of an investment thesis, and are also useful to make us get quickly up to speed with respect to relevant themes that take place in countries different from ours.
The value of that network is immeasurable. Building it up and nurturing it requires precious time and effort. To replicate it is not easy. Our almost 20 years of existence and the tradition of supporting the companies where we invest in, respecting their managers and shareholders help us a lot.
- With this blog, we’re trying to bring together a highly-qualified group of people to poll and leverage our individual efforts into something more formidable.
3) Developing and improving systems and processes that help to process “in parallel” the information gathered collectively.
At IP we are highly concerned with the storage and the flow of the information we generate, and that is so precious to us. There is no use in gathering lots of information generated by the “permanent prospecting” of analysts described in (1) and the “intelligence network” mentioned in (2) if both the information and the analysis are not prepared and stored in such a way as to be easily accessible in the time and place where the “end user” effectively needs to use it.
(…) With this purpose in mind, we created 5 years ago, an intranet that allows the synchronous participation (in real time) and asynchronous (the information is stored and the user participates when it is more convenient) of partners, employees of IP and selected guests, and it is accessible from anywhere in the world.
The system itself is very simple. The key to make it work is the relentless willingness to make it happen. It took a lot of time to get widespread adoption. But once it did, it became part of our lives. Gains in terms of organization, productivity and alignment of the group have been significant.
- With this blog, we’re merely taking something already embedded into our workflow and culture – remember, “Culture eats Strategy for breakfast” – and taking it to the next level.
4) Really doing what we say we do: following in a relentless, disciplined way a value oriented investment philosophy with a long-term investment horizon, supported by independent, fundamental research.
In order for the tacit knowledge built up throughout the time to be transformed in decisive insights, so that hypotheses and ideas generated in various nodes of the “IP Network” evolve towards becoming grounded investment decisions, a differentiated “research” method subordinated to a strong investment philosophy is key.
- Whatever this blog is or becomes, it doesn’t in any way change one iota about our philosophy or the discipline with which we approach long-term, value-oriented investing.
