theperksofbeinganINTJ

It's steak . . . how much differentiation can there be? You turn up the heat, add a little oil and salt, and turn it over. That's it. It's as basic as it gets. Ruth's Chris is Outback with a better wine list and higher rents. It makes perfect sense that for many restaurants, the food doesn't matter. Does anyone think they can tell the difference between the food at the Capital Grill/Capitol Grill/Capital Grille? It's all the same thing. It's just a way to sell alcohol. Have you noticed that the waiter asks you if you want another drink, but not another entree? The entree is just the excuse to sell alcohol. In fact the guy I talked to has started over 20 restaurants and he doesn't even like to open for lunch because he can't sell enough liquor at lunch. GregS: you're right, that's net but it's probably not too far off. Maybe closer to $1.75M - $2M. This is a bizarre exchange, by the way, in two ways - a) "how much differentiation can there be" - the differentiation is that at FOGO, you get your choice of 10 cuts of meat including multiple kinds of steak, lamb, not to mention an unlimited salad bar with like 20 things on it which is so good that flipping vegetarians eat at FOGO just for the salad bar - I assure you that eating at FOGO is nothing like eating at either Outback or Ruth's... b) Food doesn't matter? Huh? Where have you been for the entire foodie revolution? For the Food Network? For "better burgers" i.e. five guys and smash? For Stephanie Danler's Sweetbitter selling for a 7 figure advance? Food is certainly a thing that matters... maybe not in, like, blue-collar rural West Virginia. (I don't know, I've never been there.) But in any major metropolis, it's a capital-letters Important Thing to a lot of millennials/professionals. In a specific category of restaurant (say, American bar and grill, like BJ's) then sure, the consumers have no taste buds and you can serve them drek and push alcohol sales and whatever I guess. I am not an expert. But FOGO's best in class margins are despite a substantially lower alcohol mix than peers - so not really sure what you're driving at here...

6) Not that I try to predict quarters, but considering that the CFO bought shares in the open market during the last week of September, it would be rather surprising if they miss or guide down again this quarter... so I don't even feel like I have my usual value investor "risk" of "I'm probably not timing the bottom here." Obviously who knows what happens with '17 comps but insider buying would suggest that, as of 2-3 weeks ago, things aren't getting worse and are probably getting better (at least internally if not in the macro.)

don't have time to reply line by line but some high level thoughts. 1) ratiman - your comments on PP&E /NOPAT/etc - I understand what you're trying to do but you're missing a few steps. RUTH restaurant base is much older and more depreciated relative to FOGO, and as glory pointed out, margin profile is very different as well. Moreover RUTH is 2x the size of FOGO and has much less G&A lvg going forward relative to FOGO, not to mention much more limited growth opportunities. I'm underwriting FOGO getting to, in a decade, less than where RUTH is, today, and doing so very conservatively. 2) Taking my model and then haircutting it is a little wonky; I've already made substantive haircuts from mgmt targets. When you talk about my estimates of cash on cash returns and say "oh the RONIC isn't awesome", bear in mind I'm already trying to underwrite a realllllllly conservative scenario here. I'm giving them no credit for TIs (i.e. adding $1mm cash capex dollars per store, or 20% boost relative to target), and then I'm haircutting incremental 4wall ebitda from $1.9MM to just over $1.6MM (or, 15% cut in 4w ebitda dollars), and then I'm not giving them full credit for G&A leverage, and using 50 bps higher marketing expenses than targeted on top of that. And of course no JVs, which are free found money if they work out. And I'm using an interest rate higher than they're actually paying. And maintenance capex that includes the mpx of future remodel costs without assuming any collateral comp lift (which isn't really that conservative but is certainly not how many people model restaurants). And after all that your RONIC (much more important than ROIC, for FOGO or any other company), is still substantively accretive. I compared pre-tax/pre-tax because calculating the depreciation tax shield gets messy. Someone more adventurous than me can run all that math. My model obviously includes tax payments over time and you have to get all the way down to $5.5MM AUV / 15% store-level margins for it to not be accretive. And again this assumes all of the above. If you give them back credit for the TIs, then you have to assume boxes go below $5MM rev at 12% margins (that is 65% decremental four-wall margins from targeted, guys!!! basically implies that all non-food costs are completely fixed, which is ... unlikely) to arrive at the current stock price. I don't want to belabor the point but it's extremely challenging to model a scenario, absent a 2008-like recession happening tomorrow, that makes this stock worth less than $11 - and newsflash, if that sort of scenario happens, the rest of the market isn't exactly going to be roses and rainbows either. (And I would point out that such a scenario wouldn't break FOGO - it would just push the numbers out to the right - hard to see permanent capital impairment here.) 3) I think everyone has a different palate. I had a roommate in college who was perfectly happy eating microwaved burritos and ramen... and I'm an adventurous foodie, but I can't taste a difference between FOGO steak and prime steak (maybe a little but not worth the price delta.) Regardless of what your personal food preferences are, I think it's important to abstract yourself from what *you* would eat and think about this in terms of various demographics. i.e. all the entrees at BJRI/CAKE bore me to tears, and PBPB/PNRA are very yawn as well, but clearly there is a significant segment of the population that enjoys bland food with no sense of flair or flavor. And just because that's not my thing doesn't mean it's not everyone's thing; I almost never eat fast food but despite my lack of personal patronage, the category continues to exist. So, learn from Einhorn's mistakes on CMG way back when - look at it from the perspective of the target demo. I think FOGO's solid yelp reviews + great AUVs in pretty much every statistically meaningful metropolitan area suggests that they have enough of a core demographic to be successful, and the continued success of tenured restaurants (like the original Addison location in my backyard) corroborates the idea that it's a "timeless" concept that has done well over 20 years of existence and didn't flame high then burn out. 4) A lot of the nitpicking around this or that assumption here is really besides the point. As someone pointed out, at $11-ish, you're basically underwriting no growth to de minimis (LSD) growth depending what cost of capital assumptions you use. So, the way I typically evaluate valuation is that a lot of questions are meaningful at certain times. Whether RONIC is 13% or 17% or 25% matters when the stock is at $15 - 17. At $11-12, it's much more directional in nature - can FOGO build new boxes? Yes - okay, then will they be somewhat accretive? Yes - then the stock is worth something more than it's trading for. 5) I thought I did a pretty good job of explaining how the gauchos/tableside plating/prix fixe menu cuts down a lot of the back of the house costs, which explains their structurally higher margins vs. the peer group. As for "why hasn't someone else done this yet" I mean I don't know how to answer that because it's completely tautological - it's not a helpful question because it applies to any company ever - if pageranked search engines were so great why hadn't anyone built Google before Google? If cloud CRM was such a good idea then why didn't Benioff's competitors do it before Salesforce? Why does COBF need to exist when there's VIC and Seeking Alpha and so on? Why didn't someone do Chipotle before Chipotle or Five Guys before Five Guys or Smashburger before Smashburger or Panera before Panera? I think it's easy to get too cute and outsmart yourself. Buying a business with great economics and a long growth runway at a great valuation generally tends to work out pretty well over the long term. The THL stuff is the only wildcard but could just as easily be a big net positive as a potential negative - they want to see nice returns on this - and it's not like they have to harvest it tomorrow; 24 months is an eternity in the deal world and they've been around the block. For heaven's sake if FRGI is attracting PE interest (as is rumored) at probably 8.5x+ EBITDA after their completely botched expansion into TX with Pollo Tropical and real questions about how much growth opp they have outside of FL going forward, then FOGO has to be worth at least 9 - 10x in a sale today... remember THL paid 9x in a much lower multiple environment (2012). Who *wouldn't* want to own this asset?

1) capital allocation - pretty one-decision; they're going to deploy most cash flow into new boxes and debt repayment in the short term. Longer term they seem to be interested in paying out a dividend with capital they don't need, or potentially a share buyback program. But not really an issue in the next few years (particularly with THL on the Board). This becomes more of an issue in the out years but by that point cash flow and growth will make shares' intrinsic value $20+ so let's not get too far ahead of ourselves here. 2) growth runway / Brazilian being gimmicky - I hear this one a lot and never quite "get" it - see my comments about sushi, galbi, other sorts of experiential food - I would actually make the argument in reverse; I love FOGO as a concept and would eat there all the time but as a major foodie, would never spend my own money at a prime steakhouse - there is literally nothing about those (or "New American" more broadly) that appeals to me; I'm not going to pay someone $70 to make something I can make myself. I literally do not understand why anyone not on a corporate card would ever eat at a prime steakhouse when they could eat at some cool indie restaurant where they'd get to eat something they wouldn't be able to eat anywhere else. (very millennial of me, I know.) now clearly, using any one personal perspective overindexes to personal taste/bias; for example I don't understand why anyone would've stopped eating at CMG because of a small safety incident that is frankly less concerning than much of what goes on in the industry but isn't publicized (it's kind of the wild west out there.) but continued terrible comps clearly suggest that I'm more forgiving than many. On the other hand, with FOGO, thousands of Yelp reviews and strong AUVs across geographies (and strong cash on cash returns with all new restaurants opened in the past 10 years) seem to make it pretty clear that it's not just a "gimmick" - the original Addison location here in Dallas has been around for darn near 20 years and does something like $10MM AUV to my knowledge. (And, I should note, the Addison location is literally right across the street from a Texas de Brazil, and within two blocks of at least another 3-4 high end / "prime" steakhouses - so it holds its own.) Obviously we like our meat in TX, but it's just hard for me to imagine that Fogo is anywhere near saturation. I think the concept will actually get stronger over time as more people come to know about it... anecdotally I have many friends who live/have lived in major DMAs and have never even heard of, let alone tried, FOGO/Brazilian - and love it when they do. Given how much competition RUTH has from local steakhouses (as well as chains like Morton's, etc), using where RUTH is today as the benchmark for where FOGO will be in 10 years seems pretty darn conservative. So, yeah, there are going to be plenty of people who don't eat at a FOGO - just like there are plenty of people who don't eat at CMG or RUTH or any other successful concept - but as long as FOGO can carve out its own demographic, that's not really a concern. At worst, at the current NOPAT/free cash flow yield, you really don't have to underwrite very much growth at all for the stock to be at least fairly valued... after absorbing another year of MSD negative comps, labor pressure, etc. For the best-in-sector concept with best-in-sector economics, I'll take that all day long.

ironically their huge labor arb actually makes them one of the most attractive restaurants to own if you're concerned about minimum wage and/or economic softness - there's this quote from David Zalman of Prosperity Bancshares on their Q1 call where he says something to the effect of "if we're hurt, everyone else will be under a bridge eating beans" (because Prosperity's credit quality is absurdly rock solid.) That's sort of how I think about FOGO - the sort of environment that would wreck everyone else's margins would imply more modest contraction for FOGO because they have farther to fall. I agree that some caution here is reasonable on both factors - i.e. current soft comps continuing into '17 as well as labor inflation - but I believe this is offset by conservatism elsewhere in my valuation (ex hard-capping US restaurant count at 75 and US revenue in 10 years at RUTH's current domestic revenue base) and FOGO's extremely favorable unit economics. Even if cash on cash returns are only teens, and the SSFCF yield is only 8-9% rather than 10% (if you flow through really bad comps along with margin compression), that's still a fundamentally attractive investment with a decade-long runway for accretive reinvestment... so you can absorb a bunch of hits here and still earn an acceptable equity-like return.

that's not my FOGO writeup, silly. That's my quarterly letter. This (attached) is the summary of my take on FOGO. If you're gonna repost my content without my permission, at least repost the right content... :) Notably, Tony Laday (CFO) bought $10K worth of stock with his own money at the end of September. I've met Tony in person and chatted with him on the phone a bunch, but have not interacted w/ the rest of the mgmt team and I don't have any strong feelings. THL's intentions are probably more important than management at this point; as long as they don't massively screw up siting, the concept and economics pretty much do all the heavy lifting themselves. That said, Larry Johnson (CEO) has clearly overseen a period of significant value creation since '07. There is a nice interview here: FWIW, some local market color - the submarkets in Dallas where they're dropping their next two boxes (Uptown on McKinney avenue, and Legacy in Frisco/Plano) are both pretty ideal spots IMO and are exactly where I'd put them (not that I'm any sort of expert - just saying that if you think about where a Fogo makes sense in Dallas in addition to Belt Line on Addison, it would be those two locations, and then somewhere in Fort Worth). If anyone who lives in another DMA and has local market knowledge thinks FOGO is making (or has made) a big boo-boo on location, I would be very interested to hear that. The only real question mark not related to transitory macro factors is the Summerlin NV location - which I think should work out okay over time but appears to be a bit slow right now. (Woodlands and Puerto Rico seem more macro related than siting mistakes, i.e. oil/Zika.) If anyone has credible bearish arguments here, PLEASE email me. I'm not interested in hearing about "there could be a recession / tax loss selling / the price could go down further" kind of stuff because those are pretty obvious and I'm not in the business of passing on extremely attractive investment opportunities because they could get more attractive. However, I'm still looking for anyone who has actual fundamental arguments against FOGO that aren't just conjecture - i.e. not casual observations but actual coherent thoughts from somebody who's done work on them and the comp set. Big thanks to glory and Travis for helping me stress-test this thesis. 2016-10-03_-_Askeladden_Capital_-_Long_FOGO.pdf

Barron's would disagree with you, Roark... they used FOGO as a CMG comp this summer. One sentence before using Taco Bell as another comp. I'm not sure which is more amusing... (h/t Barbarian Capital - https://twitter.com/barbariancap/status/678980527299428356.) Notwithstanding what I'd refer to as "macro" arguments - i.e. labor costs / softening restaurant comps / the generally fickle nature of consumers / etcetcetc - does anyone who has done real work on the stock actually have a credible FOGO-specific bear case at this valuation? While short interest is small in absolute terms, it's actually decent relative to the float. Why? Are there any Bad Things about the business? Are there any Bad Things about T.H. Lee? Why will FOGO fail? Why can FOGO not scale up to the size and location density of, say, RUTH? These are questions I've been looking for answers to and haven't yet heard any good ones (other than "the stock might go down," which, well, welcome to value investing.)

Dear Random Internet People, Howdy. I'm the kid from Texas who you've been talking about. My initial inclination was to not respond to any of this for the same reasons any company that complains about evil short-sellers (cough Patrick Byrne cough) is doomed - i.e., if you do your job, the proof will be borne out for all to see, and if you're so concerned with your image that you get bent out of shape over one or two mean comments, then besides the obvious suspicion that raises about why you're so defensive, you have no business being a public company CEO (or fund manager, or rock star, or whatever). As one of you pointed out, if you can't take the critics, don't jump into the arena. That said, after watching this evolve and noticing the high pageview count, I eventually decided that offering my perspective on some of the issues raised might be beneficial insofar as ensuring that this doesn't turn into a runaway train that ends up being a negative Google hit when prospective investors are vetting me. You are more than welcome to continue playing armchair shrink about who I am and why I'm doing this... if you have nothing better to do than take potshots at a middle-class suburbs kid pursuing his dreams, that's totally fine with me, y'all have fun with that. But I wanted to say a couple things of my own to provide full context for those who want the story from its source. Fair warning, this post is absurdly long. I'm an amateur novelist... brevity is not my strong suit. tl;dr y'all raised many valid points (particularly wrt long-term track record being the proof of process) but I'm not who you apparently think I am and I'm about as far from arrogant as you find on the buyside. So I ponied up the $30 and here I am. If you really want an informed opinion on me, this should help you build it (for better or worse). I really don't care what that opinion is; I do care that the information you're looking at is properly contextualized so you can draw accurate conclusions. Please note that whatever materials were posted here by the OP were posted without my prior knowledge or consent; while I'm flattered he found them interesting enough to share, they are designed for my current/prospective investors and fellow fund managers / value investors and not for a wide audience. So when I'm writing them, I am not really thinking about how they come off to random people on the internet. In particular I'm set up 506(b) and want to stay that way (for now) so I've been very careful not to discuss my performance publicly. Thus I don't really know how to handle this whole situation compliance-wise, kind of a cluster... the last thing I need is my counsel sending me a memo on more billables... he isn't cheap and I'm not made of money! Since I've been getting numerous emails, I guess I'd ask you not to contact me regarding any prospective investment in Askeladden (whether SMA or partnership) if you're non-accredited. That's my good-faith effort to put the toothpaste back in the tube here. Okay, moving on, first issue: many of you have made various points about track record and so on. I completely agree, 100%, that the proof is in the pudding, for me or any other fund manager. The irony here is that I wouldn't invest in me if I were a publicly-traded company: I invest in companies with a demonstrated track record of profitability; I'm not a venture/early-stage growth kind of investor making jockey bets (which is what I, as a fund manager, am today). Like one of you, I usually want a 7-10 year audited track record when I'm evaluating a public company! (Although on the fund side, nobody who wasn't independently wealthy would ever be able to get into this business if it took a 10yr record to raise capital.) It's honestly incredible to me that I'm getting as much traction as I am; I expected capital conversations to be much more challenging. That said, there are plenty of prospective investors I've talked to who want to see a 2-3+ year track record prior to allocating, and that's totally reasonable. There are others who give me a little and will add more based on performance, and I encourage that. In fact, one of the topics in my most recent letter (which I think was posted on here) is that short-term results demonstrate very little and I judge my own short-term performance by how well my process is working rather than mark-to-market - if I get the process right, performance takes care of itself over the long-term. My results this year are more attributable to luck than skill (IMO) - I got lucky on timing with pretty much every name and LQDT at $6 in particular was literally a gift (note that my first tranche in my PA was bought at $10 and I was buying all the way down - fund launch just happened to nearly coincide with the bottom) - and I've bent over backwards to make sure my current/prospective LPs understand those things. Obviously talk is cheap; value investing is theoretically very easy (buy stuff for less than it's worth! --> ? ? ? ? ? --> PROFIT!!!) but as the underpants gnomes found out, that middle step isn't so trivial after all. Whether you have it down or not is proven out by time - way more time than I've started my fund. I think I have a lot of good ideas but also a lot of room for refinement. We'll see how it goes. Second issue: my age. To my knowledge and contrary to what some of you have posted, I have never claimed to be some kind of whiz-kid prodigy, nor have I claimed to discovered something revolutionary that the rest of the finance world is missing (cough Jacob Wohl cough). I'm simply doing the obvious thing that's been proven over and over hundreds of times - small-cap value investing. Nothing new or proprietary or exotic under the sun here. I actively seek and collect mentors who've been doing it for longer than I have (with the track record to back up what they say). I'm actually having really good dialogue with two of my prospective LPs who are value investors in their own right; they're the rare people able to push back on some of my core beliefs and give me pause. But I'm not an ordinary 22-year-old in many ways - for example, I started community college at 13, finished my MBA by the time I was 20, and have been working full-time in the finance sector for exactly four years to the day (first with Seeking Alpha Pro as an editor, then a little over two years as an analyst at a small-cap fund, and now my own fund.) I've probably been in 100+ management meetings at conferences and on NDRs and whatever. This ain't my first rodeo. Experience is undeniably a positive, but you'll also run into a lot of 30 and 40something investors who make the same mistakes over and over and over again - something I try my very best not to do. I'm big on positive psychology and I believe one of the keys to success is having a "growth mindset" and always looking for ways to improve. I have my fair share of battle scars (and I like explaining to prospective LPs exactly what those were, what went wrong, and what I learned from them) - and I'm sure I'll make plenty of mistakes in the future and learn from those as well. Not that academic achievement is necessarily a predictor of success, but I'd point out that I'm far more educated and experienced than Allan Mecham was when he launched Arlington Value - age and experience aren't everything. So yeah, I'm 22, but I don't judge myself relative to 22 year olds - I judge myself in absolute terms and compare myself to the best in whatever area I'm thinking about (investing, writing, parenting, etc.) I'm a better writer than the vast majority of people, and that's an objective fact (see the Atlas Shrugged essay contest, for example) but when I read prose like Sweetbitter by Stephanie Danler, I realize that I still have a loooooooong way to go as a writer. Call this arrogant if you like, but I'm more self-aware at 22 than most 50-year-olds I meet, and anyone who's actually talked to me recently would agree with that. Part of this is due to my long-running struggles with anxiety and depression as a teenager and young adult - which drove me to seek out a lot of psychology/philosophy stuff (from Aristotle to Rand to positive psychology/Covey 7 Habits/etc, which is all based on the same underlying concepts). One of you very rightly mentioned that emotional control is super important to investing (see the empirics about brain-damaged people or those w/ Asperger's making better investors in simulated betting situations because they aren't as affected by emotion). I recognized that in my own life, as my biggest professional and personal roadblock wasn't my analytical capabilities, but rather my underdeveloped EQ - so ironically having started at a much lower point than the average person forced me to focus on that side of the game a lot and I now consider it one of my core strengths. (fwiw three years ago, a thread like this would've had me cowering in my bathtub and crying because random people on the internet said mean things about me. Now I'm just laughing at the sheer lunacy of some of the comments. Progress!) Third issue: why I'm doing this. There are a lot of reasons. I'm pretty transparent about all of these with my investors; authenticity is one of my core personal values and if someone's going to entrust their capital with me, I feel they deserve to know the whole story end to end. I want an intellectually stimulating career that allows me to spend my life learning how the world works, and value investing certainly provides that - it's one of the natural endgames for people who love mental models. The question then is whether you want to work for yourself or others; I want to work for myself for two main reasons - a) I want control over my time (because family, and also because I'm an incurable night owl and mornings aren't my friend.) b) I want to create real value for people, and think that the fee structure on most of the buyside is usury - most long-short funds are a fee structure in search of a mark; it's an excuse to underperform while still charging exorbitant fees because net exposure sharpe ratio something something whatever. I put my money where my mouth is - I only charge a performance allocation on outperformance vs. the S&P 1000 Total Return index over a three-year period, in line with my average investment horizon on new positions. I stole this idea from Lisa Rapuano because I thought it was brilliant (she later abandoned it, but I'm not at all deterred). If I don't beat the free Vanguard product, I have no business charging a "performance" allocation to add insult to injury. So, ultimately, running my own fund allows me to live my life in accordance with my personal and professional values, and if anyone has a problem with that, that is totally fine - I couldn't care less. "My life is for itself and not for a spectacle." I'm optimizing for my own personal happiness, not status or money or anything else. re: whoever thought I was jealous of my 20something peers modafinil-ing it up to get through the perpetual-hangover 100-hour-work-week at Goldman and wherever - oh c'mon didn't you even bother reading my LinkedIn? Wall Street is so not my scene. I have buddies at Moelis and Goldman and so on and I want absolutely no part of it. The drinking culture alone would be a major problem (I don't drink because it runs counter to my personal values) and don't even get me started on the sleep (or lack thereof). Since when did we collectively decide it's acceptable, encouraged even, to make multi-million dollar decisions with other people's money while high, drunk, and sleep-deprived? Nah. I'd rather make peanuts and live life on my terms than vice versa. I honestly have way more in common with the lyricist of my favorite emo/pop-punk band (Kyle Fasel of Real Friends) than I do with most people in the finance industry - I look at the way most people live their lives and what conventional "success" really means, and it seems so pathetically empty, and I want something different and real for myself and (eventually) my kids. I had my mid-life crisis at Roth 2015 when I found out what was at the top of the traditional buyside mountain (nothing existentially meaningful) and realized I didn't like or want it. So I pulled a John Galt and shrugged. Now I'm blazing my own path. My transparency about who I am and why I'm doing this (in an industry largely built on opacity and projected image) automatically eliminates 90% of prospective clients... I'm not stupid. I realize that. If I wanted to play the image game, I could certainly wear dress shoes and suit pants instead of Chuck hightops and skinny Levi's to client meetings. I could professionalize my LinkedIn and stop making pop culture references in my quarterly letters (how I'm gonna top Colbert and Madden and Avril Lavigne and Calvin and Hobbes, I honestly have no clue). But it's about function over form. I only need a handful of philosophically aligned LPs to get where I want to go. I would rather people regret not investing with me than regret investing with me, and I try to put as many roadblocks up as possible (long-only, lockup, my shoes), so I know the LPs who end up with me are the right ones investing for the right reasons. Like Buffett, I'm lucky that my talent is something profitable rather than, say, underwater basket-weaving, otherwise I'd be a broke bum panhandling on the street... or maybe just a roadie hauling Marshall amps to and from rock shows. Fourth issue: the supposed "heavy promotion" which like lol what? Lemme clarify here. The whole reason I'm trying to get my name out there via whitepapers and so on is I feel that's the best way to fulfill my fiduciary duty to investors while also building my business (capital isn't just going to magically show up at my door, c'mon guys, as Nate said there's nothing romantic about being a startup entrepreneur living in your childhood bedroom and putting money into your business to keep it going). I've always found the model where startup managers spend 60-70% of their time cold-pitching institutional allocators to be completely bizarre and, honestly, a bit unethical. I view my job as research, and everything else (marketing, compliance, etc) is just an unfortunate annoyance that I have to deal with to allow me to do what my investors are paying me to do. Since I know I don't have the right pedigree, not to mention an utterly non-investable strategy, there is zero point to me wasting my time cold-pitching. It's just a non starter. I didn't even have a pitchbook until last month when I found out I needed one to list on SZ CapIntro. Writing content is something I'm good/fast at, and it allows me to only spend precious time on conversations with people who are philosophically aligned. It's far from "relentless pitching" - it's putting my name out there and having conversations with people who are interested after assessing my approach. Inbound marketing a la Hubspot or Techtarget; I'm the literal opposite of a pushy salesman selling vacuums door to door. I obviously need to scale the fund somehow (I'm currently paying fund admin/compliance/audit expenses out of my own pocket while I ramp AUM - I have six years of runway saved up but would like to get to breakeven at some point soon), so I feel like that approach is the one that makes the most sense and allows me to get to a point where the fund is paying its own expenses without distracting from research. Again, the amusing thing to me here reading this is that unlike funds that are marketing machines, my plan is to get to mid-8 figures over time and close the fund to maximize returns for existing LPs. I spend a de minimis amount of time on marketing - but the time I do spend is super high impact (spend an hour writing a paper to publish online, and I get in front of 100+ prospective investors rather than 1). My marketing may be more visible than that of other managers, but that's the whole point - more payoff, less time expenditure. Based on initial results, my mentor told me to "put the pedal to the metal," although it'll probably be a while before I post any other whitepapers because I already have too many prospective client calls/meetings and I can't afford to sacrifice any more research time. Fifth and final issue: my supposed "hubris." I'm probably one of the least hubristic buysiders you'll ever meet; the whole reason I very rarely build DCFs is because I have very limited confidence in my ability to predict the future with any precision. I'm big on epistemology - what can I really know and why? I'm looking for big margins of safety, not decimal points. I also don't try to predict the macro because I'm just not smart enough to do that. I run my fund unlevered long-only and have been at a double digit cash position all year with a long-term target of 15-25% (for Klarman reasons). I'm humble enough to realize there's no alpha in shorting and that leverage eventually blows you up. A lot of investors are attracted to extremely complex situations with lots of points of failure... I'm the opposite. I take the Munger approach of only swinging at easy pitches. If I feel like I'm the dumbest guy in the room and yet a situation is still obvious enough to be worth allocating capital to, then it's probably a pretty good bet. If my downside is covered by valuation, cash flow, management quality, business quality, and the balance sheet, I don't have to be very smart to do well. As a result of having my butt kicked on certain things over the past few years (which I make a point of talking about with prospective LPs), I have narrowed my focus to a very small circle of competence and avoid things I have found myself to be terrible at (for example, leveraged companies, asset plays and event-driven - i.e. anything where time is the enemy of your returns.) I own my mistakes so they don't own me. I'm very process-driven and believe that IQ is helpful but only to the extent that you apply it the right way - I mention in my pitchbook, for example, that Mensa's investment club has woefully underperformed the market over a very long time period. There are other obvious examples like LTCM - or more recently Einhorn with Micron and Ackman with HLF/VRX - smartest guys in the room getting it wrong for reasons that weren't all that hard to figure out ("this time it's not different"). Also note I'm not planning to scale the fund to 9 figures because I think a large degree of my returns will come from opportunity set as much as they will from my skill - taking concentrated positions in small/micro-caps becomes very unworkable very quickly (something I learned from my former PM, who ran into that issue as he scaled his micro-cap fund to a mid-9-figure AUM level that was frankly way too large, before he decided to wind it back down.) I have no clue how I would efficiently allocate $200 million today (let alone a billion.) I play where others can't b/c of size, liquidity, etc. Quick example, I made a nice gain on loading up on Franklin Covey post their last earnings report... the market just completely missed the deferred rev rec addback that has to be made thanks to their new subscription product that hits the P&L but is irrelevant to cash flow; I proclaim myself to be utterly terrible at accounting but even I noticed that much. Happens w/ illiquid $200MM companies but not super-liquid 10 billion-dollar ones. Not a scalable source of alpha, and I recognize that it wasn't my brilliance, it was just my opportunity set and modest AUM that enabled me to build that position at a favorable price and deliver some value to my investors. Anyone could've done it; I just happened to be one of the few looking at it that day because I'd been following the company for 18 months and it was one of my wishlist holdings that had only recently gotten cheap enough to buy. So, no, I don't have an inflated opinion of myself or my abilities. I don't have any delusions about being Munger 2.0 (not yet, anyway - that's the long-term goal.) I'm very cognizant that I have limited experience, limited resources, and so on, and try to craft my investment process around that (there are a lot of interesting ideas I pass on because I'm not confident in my ability to evaluate them). Incidentally, the only reason I list my test scores on my resume is that it was recommended to me by some McKinsey consultants when I was in recruiting - since I didn't go to an Ivy or work for a top-flight employer, listing my SAT/GMAT/etc conveys that it wasn't due to lack of ability or competence and that I have the analytical ability that is usually corroborated by having a brand name on your resume. I appreciate the constructive feedback on how the no-studying thing came across the wrong way. You were right on that and I have removed that from my profile (although I left the test scores on there because I still believe they're a valuable data point for people who are vetting me). I think that covers all the important stuff, and you deserve a medal if you actually took the time to read and consider it. You are welcome to read my work on Harvest, SumZero, or Seeking Alpha and decide for yourself whether I'm a thoughtful analyst or not. If you have something useful to say, my contact info's on my LinkedIn and you are welcome to reach out to me directly. :) I probably won't respond further here as I think I've said everything I needed to say to communicate my story and correct some of the misconceptions that have been raised, and I have better things to do than spend all day writing personal responses to anonymous people on an internet forum. Best wishes to everyone with their investments. It's hard finding value out there. Your friendly neighborhood hedge fund manager, Samir P.S. I realize the whole Madoff/Theranos The Blood Unicorn tangent isn't exactly directed at me, or at least I hope, I am kind to puppies and children and really don't know what I ever did to deserve that sort of comparison. But in case anyone's wondering, a bunch of my prospectives want SMAs for compliance reasons and I'm totally cool with that - higher margin since it saves me incremental admin/audit fees anyway... honestly in retrospect I should've just gone SMAs first and not stupidly started bearing the full fixed costs of a partnership unless I had to. Oh well, at least my intern won't make the same mistake when he eventually starts his fund. P.P.S. Coincidentally, I'm actually quite fond of OP's man-in-the-arena quote... Brene Brown uses it extensively as a metaphor in her book Daring Greatly, which is one of the (many) things that inspired me to stop optimizing for others' expectations and start living my life the way I wanted to live it.