Brent Beshore – Cultivating a Disaster Resistant, Compound Interest Machine

**Patrick O'Shaughnessy** (0:00)
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Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, methods, stories, and of strategies that will help you better invest both your time and your money. You can learn more and stay up to date at investorfieldguide.com.

**SPEAKER_2** (0:59)
Patrick O'Shaughnessy is a principal and portfolio manager at O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (1:21)
My guest today is Brent Beshore. This is the first interview he has done in this format and his story is incredible. Brent's mission is, in the spirit of Buffett and Munger, to cultivate a disaster-resistant compound interest machine. Still just 33 years old, Brent has built a portfolio of private companies very quietly outside the limelight. He has no outside investors. The results he has generated are otherworldly. But his journey hasn't been easy. We discuss all the lessons he has learned along the way. Sourcing and evaluating businesses, how he and his team have improved profitability at his portfolio companies after acquisition, and so much more.
Okay, here we go. Please enjoy this conversation with Brent Beshore. All right, well, Brent, thank you so much for taking a bunch of time with me today. I think our goal will be to, as you say in your firm's motto, explain what cultivating a disaster-resistant compound interest machine is all about.
Sounds like someone brilliant in marketing came up with that. I couldn't come up with a much better slogan for building a business.
So maybe what we could do is start by you giving us a bit of background about who you are, how you got to this point, and why you've chosen kind of your path as the best way to express the things you're good at.

**Brent Beshore** (2:45)
Yeah, well, first of all, thank you so much for having me on. It's a pleasure. As I think I told you over email, I hope that I can provide negative framing to your other guests who are the who's who of the finance world. So yeah, so my journey has been very entrepreneurial and very winding is how I would describe it. We started companies, we've bought companies, we've sold companies, we've invested early stage, we've done complete acquisitions.
We've pretty much done almost all of it in an effort to find out what we think works better and what doesn't. I think that's kind of the motto that we always talk about is having the highest opportunity costs in the world and playing in the most inefficient markets, right? If you get nailed those two things and you happen to be decent at what you're doing, I think it produces some pretty interesting results.
So for us, I mean, the biggest opportunity that we see is participating in what we call the lower end of the lower middle market. So we look at companies that are between one and $10 million of owner earnings. And we looked at about two, little over 2000 of them last year in an effort to get three deals done. So very, very few deals do we get done. We're trying to be very choosy. We're trying to find, well, if you want to use a Ben Graham analogy, we're trying to pay for a cigar butt and hopefully get a cigar.
So how I describe what we do is we buy boring businesses and make them less boring. We pay a reasonable price for them, help the company's leadership to transition, and hopefully make everyone's life a little bit better. So I don't know if that gives you a good framing.

**Patrick O'Shaughnessy** (4:23)
It does. You already mentioned something very interesting, which is this 2000-sized universe that you looked at just last year.
And there's been so much about the shrinking of public markets, both through buybacks, so less float, but also through companies going private, going out of business, fewer publicly listed stocks. So it's a good reminder that there is a massive universe of businesses out there, which could be investment targets, acquisition targets. They're just private.