Sydney Meet up with Dave - Oct 27th, page-26

There's a guy called Ian Cassel who says one of the things you should look for when choosing to make an investment in the micro/small-cap space is an "intelligent fanatic". He borrowed the term from Charlie Munger, who's definition or thereabouts you can read for yourself here.

Now I don't know what the future really holds for Buddy as a business or as an investment. I do know however that there have been an increasing number of positive announcements, stripped of hyperbole, best-case scenario's or only focusing on the potential "total addressable market". Instead Buddy's announcements have been the building blocks for the future, a shot across the bow of what is to come. Not announcements meant to illicit short-term and unsustainable share price pops, but rather the foundation for medium to long-term, sustainable growth.

I also know that Buddy and the fields they play in, Smart Cities, Internet of Things (IoT), energy, cloud, mobile, data, all have tailwinds and vast swathes of opportunities for those willing and able to seize upon them. I also know that again, Buddy talks about what they are doing in these fields rather than just the vastness of what the opportunity could be. Acknowledging there is an opportunity is great, it's certainly a start. Acting on and fulfilling that opportunity, well that's not the start, it's the actual race. But I also know that even Buddy is still early in the race, but they are making the right moves and noises.

How many of these opportunities they can successfully seize upon remains to be seen in the coming weeks, months and years. But one other thing I know is that I don't have to worry too much about the motivation and character of the leadership of Buddy. To borrow from Munger's definition of an intelligent fanatic:

A CEO or management team with large ideas and fanatical drive to build their moat. Willing and able to think and act unconventionally. A learning machine that adapts to constant change. Having a focus on acquiring the best talent. Able to create a sustainable corporate culture and incentivize their operations for continual progress. Their time horizon is in five or ten-year increments, not quarterly, and they invest in their business accordingly.

This is Buddy in spades. It's still no iron-clad guarantee of raging success, or even a moderate one for that matter. It is one less thing for me to worry about however.

Despite researching companies we invest in and feeling comfortable with 'the thesis' it can be easy at times to question the motivation of why the business is doing X, why they announced Y, why they haven't done Z instead. I'd say it's human nature. Particularly in today's landscape with constant stimulus and forums for questions or conspiracy theories. If we haven't heard anything for a week we start second-guessing what was a comfortable position a mere matter of days earlier. Perhaps the announcement meant this, perhaps they're doing that, perhaps, perhaps, perhaps, ad infinitum.

A sense of healthy scepticism is a good thing, but can also be a distraction, a risk to one of the tenets of investing: do nothing. I know for me, despite not knowing what the future holds for Buddy, despite not knowing whether the investment or business will prove to be sound, that I don't have to worry about the motivation and character of Team Buddy. They are on-point, above-board, motivated and appear to have a great corporate culture and better yet, comradery. The do in fact all appear to be lower-case 'b' buddies. These aren't guarantees of success but I'd much bloody rather a company I own a piece of have it than not. And from the perspective of maintaining an active interest in the companies in which I'm invested, it's nice to have less things to worry about.

Many of these positive thoughts about Buddy were already in place prior to meeting Buddy HQ on Friday. Having now met and chatted to them in person, albeit only for a couple of hours, it's nice to have that perception crystalized into something more substantial.

The facts and figures reported in 4C's and annual reports are still important. It is for these reasons we invest. But not everything can be captured in a quarterly statement or report. And for those things that can't, well I'm pretty damn comfortable.