Today’s conversation is with Francisco García Paramés, chairman and chief investment officer at Cobas Asset Management, which he founded in 2016. Before founding Cobas, Francisco was with Bestinver for over 25 years. During that time, he built a legendary record and posted an average annual return of 15%, outperforming the reference benchmark by more than 700 basis points.

Francisco is based in my home country of Spain and his reputation has extended far beyond its border. As a self-taught follower of Warren Buffett’s investment approach, he is a vocal advocate of the core ideas behind value investing. Francisco is also the author of a book that I highly recommend, called Investing for the Long Term, in which he explains the underpinnings of his investment approach and experience.

On this episode, Francisco and I talk about his self-taught route to becoming a value investor, his experiences over more than 25 years in asset management during huge events in the financial markets, how he approaches valuation and portfolio construction, what it was like to run a one-man shop, and so much more!

 

Key Topics:

• Why Francisco recommends to always keep your options open (4:46)
• How basketball helped Francisco in his business studies (5:37)
• The influence of Peter Lynch on Francisco’s investing philosophy (7:45)
• From portfolio analyst to manager in less than two years (9:28)
• Finding value in the Spanish market during the early 90s economic crisis (11:21)
• Francisco’s self-taught approach to growing as a value investor (12:30)
• The importance of patience and having a long-term perspective (13:05)
• How Francisco managed the Bestinver portfolio analysis in his first decade (14:15)
• Francisco’s approach to valuation (15:27)
• Shifting to a quality and growth perspective (16:56)
• The lessons learned over 25 years of bubbles and crashes (19:30)
• How Francisco builds up the resilience of a portfolio (22:00)
• How to think about cash in a bottoms-up approach (24:43)
• Francisco’s portfolio construction strategy (28:02)
• Building conviction as a one-man shop (31:10)
• Francisco’s journey to becoming an author (36:40)
• Getting started with Cobas Asset Management (38:58)
• Why Francisco values a team approach at Cobas (40:32)
• The importance of client relationships in developing a strong base (42:10)
• Analyzing the growth of Limited Holding Group (43:15)
• Analyzing the growth and quality of Melia (47:48)
• Aligning the long-run outlook of the team, clients, and management (48:42)
• Francisco’s thoughts on the market’s current underperformance relative to growth (50:39)
• And much more!

 

Mentioned in this Episode:

• Cobas Asset Management
• Francisco García Paramés’ Book | Investing for the Long Term
• Bestinver S.A.
• Peter Lynch’s Book | One Up On Wall Street: How To Use What You Already Know To Make Money In The Market
• Joel Greenblatt’s Book | The Little Book That Still Beats the Market
• Cobas Letters from the Asset Manager
• Benjamin Graham’s Book | The Intelligent Investor: The Definitive Book on Value Investing

 

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