At Adventures, boring is beautiful.
Every professional investing team would like to believe that they have a secret sauce, or some proprietary way to beat the market, and therefore the odds. While Adventures is a professional private equity investment team, we would never claim to have a secret sauce. Our investment approach hinges on, put simply, seeking, sustaining and being boring.
Yes, sexy may sound fun. And sometimes it pays off. But boring, in our experience, is far more reliable and profitable.
SEEKING BORING BUSINESSES
Boring businesses make money because they solve an enduring problem, have created viable solutions to said problem, and continuously build a strong customer base and reputation in the process. These patiently developed, highly defensible companies do not disappear with changes in trends, small updates in technology, or by the “lust” their brand initially attracts growing stale over time. The problems they solve existed two decades ago, and will likely exist two decades from now.
Boring businesses are not stagnant, but they are specialists. They don’t make a move just to create the illusion of progress. They are perfectly fine to do the same thing day in and day out, refining their expertise, their reputation, and their solutions in the process. And, through that commitment to do what’s in the company’s best interest, rather than what looks good or exciting or sexy, they enjoy systemic health and, yes, profit.
Adventures looks for boring businesses in a variety of industries. Will buildings and homes continue to need heating and air conditioning? Yes, so we consider HVAC investment opportunities. Will the government continue to need advanced medical professionals? Unless there’s a massive restructuring, yes, which is one reason we invested in Mediacross. In places where it’s warm three quarters of the year, they will continue to build pools, which is why we invested in Presidential Pools, Spas & Patio in Phoenix, Arizona.
Boring businesses don’t necessarily make front page news, but we believe they create sexy investment opportunities.
SUSTAINING BORING BUSINESSES
When we invest in or acquire a boring business, our responsibility is to not screw it up. That’s easier said than done. When you are the new group involved, most everyone wonders how you will “add value.” We have learned that to add value without also causing irreparable harm generally means not adding value for a significant period of time, while listening, asking questions and just generally paying attention to how the business hums along.
When change does come, it comes very slowly, in ways that are hardly noticeable until you add them all up over time. That’s because lasting, systemic changes cannot be announced in big company-wide memos or public press releases. These changes are the result of strong collaboration between many people. They add up over time, contributing a small improvement to one area or another each year. In a decade, though, you look back to find a better understood, more productive engine.
All this means we have very little to brag about at cocktail parties. We are constantly investing in our companies and leadership teams, and, to date, they continue to grow better and stronger each year. But such investments are rarely in the form of large checks or a “silver bullet” idea, and the results only prove out over time. It’s all rather boring, but we like it that way.
Truth be told, our responsibility is not just to seek and sustain boring businesses, but to be boring ourselves. When we buy a company, we intend to hold it forever. That long-term investment approach means we cannot afford to take unnecessary bets. Every company we choose to invest in costs us in the form of hundreds of alternative opportunities (or, probably thousands). In Adventures’ operations, being boring takes the form of being disciplined, diligent and thoughtful.
As with many industries, there is a tendency in investing to evaluate a firm based on their level of activity. Lots of acquisitions looks sexy, It looks like progress. But when things are just running smoothly, there’s little to report. Most would call it boring. But we’ve found it pays off.
Welcome to Adventures, the home of boring. While it may not be sexy, it turns out there’s quite a bit of adventure in that if you have the patience and passion to look for it.