Romick rejects rigid style boxes because a rapidly growing company can still be undervalued relative to its future earnings. He defines value investing through price, business quality, and margin of safety rather than low accounting multiples alone.

Growth investments can also represent value
A high current multiple may compress rapidly through growth
Traditional asset-based protection can prove illusory
Modern margins of safety often come from business quality
Technological disruption weakened many classic value cases

“we don't make a great distinction between growth and value.”
Steve Romick · 35:19

“to us, value investing is just to invest with an appropriate margin of safety, buying a business or an asset at a discount.”
Steve Romick · 35:38

#value investing#growth investing#business quality

Hot Take· 1

Hot Take59:59

Health Tech Could Produce the Next Generation of Great Businesses

Romick is studying biotech, medtech, and health technology because he expects major businesses to emerge from advances following the mapping of the human genome. He compares the genome map to identifying a car's components, with scientists only now beginning to understand how the parts function together.

Romick uses nonfiction reading to build industry knowledge
The human genome map identified biological components
Research is revealing how those components interact
Commercial fruits of genomics are only beginning to appear
He expects significant business creation over the next two decades

“I believe that some of the great businesses you know, unfortunately will be creative the next twenty years. We're going to come out of that.”
Steve Romick · 1:02:33

“We mapped the human genom twenty years ago, but it was like identifying the parts to a car.”
Steve Romick · 1:02:38

#biotech#health tech#genomics#innovation

Explainer· 1

Explainer04:18

Research Tools Changed, but the Core Process Did Not

Romick contrasts the labor-intensive information gathering of the 1980s with today's instant access to company and industry material. Easier access has improved research productivity while also making investment management much more competitive.

The analytical process remains broadly similar
Obtaining company reports once required extensive phone work
Modern investors have immediate online information
Better access has increased competition among investors

“I don't know that the process is any different, but the tools that you can use to to get the information that one needs to…”
Steve Romick · 04:22

“It required a lot more grount work just to get information.”
Steve Romick · 05:26

#research#technology#competition

Story· 3

Story02:30

How Romick Learned Investing Without an MBA

Romick entered investing on his way to law school and was deliberately hired despite knowing little about finance. His mentor placed their desks together, included him in company calls, and gave him intensive work analyzing hundreds of banks and thrifts during an industry consolidation.

His mentor preferred teaching a novice to unlearning an MBA
Romick learned by observing real company calls
Bank and thrift analysis provided his first industry specialization
Hands-on data collection built his analytical foundation

“He was tired of unlearning NBAS”
Steve Romick · 02:52

“he put me up in his office, pushed a desk right up next to his and said, you're going to see what we know, how…”
Steve Romick · 03:00

#mentorship#career#investment research

Story16:16

What FPA Bought in the Teeth of the Pandemic Collapse

FPA used part of its cash reserve to increase exposure by roughly ten percentage points as pandemic fear crushed travel and financial stocks. The team added Marriott, Booking.com, AIG, Richemont, and other businesses it expected to survive and recover after economic activity normalized.

The portfolio entered the pandemic with substantial residual cash
AIG traded at a steep discount to book value
Marriott's asset-light structure supported its survival case
The fund increased invested exposure by about ten percentage points
The team did not claim to know when the market would bottom

“we took advantage of the opportunity it is at that point in time and increased our invested exposure by about ten percentage points”
Steve Romick · 19:58

“We had no idea it's gonna be shorter long.”
Steve Romick · 24:01

#pandemic#contrarian investing#travel#financials

Story36:09

Sears Shows How Hidden Assets Can Become a Value Trap

Many value investors believed Sears was protected by valuable real estate and brands even if its retail turnaround failed. As operations deteriorated, those assets were mortgaged or sold and the proceeds were consumed by the weak business, exposing the supposed safety as temporary.

Real estate and brands appeared to protect investors
Management failed to repair the operating business
Asset sales funded continued deterioration
Disruption reduced the value of traditional balance-sheet defenses

“much of their great asset base was mortgage or sold off.”
Steve Romick · 36:35

“they were burning the timber from the house.”
Steve Romick · 36:47

#sears#value traps#disruption

Takeaway· 2

Takeaway21:40

Why Investor Behavior Can Undermine a Sound Portfolio

During the pandemic drawdown, some clients withdrew money because the portfolio had fallen more than expected, while others increased their commitments. Romick argues that volatility frequently precipitates destructive investor action even when the manager's underlying process remains intact.

Clients reacted differently to the same drawdown
More investors withdrew than added capital
Volatility can trigger panic selling
Business size did not change the team's investment decisions
Long-term focus helps managers resist client-driven pressure

“On the other hand, there was more of the former admitted lay than a lotter. You know, people send to vote with their feet.”
Steve Romick · 22:34

“we just tried to be thoughtful and act rationally.”
Steve Romick · 22:47

#behavioral finance#clients#volatility

Takeaway1:04:28

Avoiding Disruption Was Not Enough: The Amazon Mistake

Romick says the fund successfully avoided many disrupted industries but failed to capture enough value from the businesses causing that disruption. Amazon became the clearest missed opportunity because the team examined it without studying it closely enough or accepting a somewhat higher valuation.

Technology transformed retail, media, energy, and medicine
Avoiding losers did not maximize performance
Winner-take-most businesses can justify higher multiples
FPA sold traditional retail but did not buy Amazon
Romick classifies the omission as a clear mistake

“Have we been more willing to pay up at least a multiple turner two to own some of the better businesses in the world whose…”
Steve Romick · 1:05:14

“We just didn't look at it closely enough. And that has to solidly go into the mistake bucket.”
Steve Romick · 1:05:38

#amazon#disruption#investment mistakes#technology

Frameworks in this episode

Capital-Structure Opportunity Allocation

Event-Liability Discount Analysis

Five-to-Seven-Year Margin of Safety

Macro-Robust Portfolio Construction

Insights & moments

⚡Myth Buster· 1

Why Growth and Value Are Not Opposites

◆Hot Take· 1