Ricky Sandler - Building an Investment Compass

**Patrick O'Shaughnessy** (0:00)
This episode of Invest Like the Best is sponsored by Canalyst. Canalyst is the leading destination for public company data and analysis. Founded by a former buy side analyst who encountered friction sourcing, building and updating models, Canalyst is now used by over 400 institutions, including the largest money managers globally and by a number of guests on the show. With detailed company specific models and data on virtually every public company, Canalyst clients are able to ramp up faster, update models instantly and incorporate the highest quality fundamental data into any workflow. If you're a professional equity investor and haven't talked to Canalyst recently, you should give them a shout. Learn more and try Canalyst for yourself at canalist.com/patrick. That's canalyst.com/patrick. Stay tuned after the episode from my sit down with Roger Freeman of Newburger Berman and Jed Gore from Canalyst. We talk about Canalyst's quant product, Candace, and how data science is evolving in the investment process. This episode of Invest Like the Best is brought to you by Levels. As one of their early access members, Levels was one of the most interesting products I've used. Levels is attempting to make continuous glucose monitoring mainstream by using real-time biosensors to see how food affects your health.
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**SPEAKER_2** (1:55)
Patrick O'Shaughnessy is the CEO of 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** (2:21)
My guest today is Ricky Sandler, founder of Eminence Capital. Ricky is a hedge fund veteran managing over $8 billion of assets across Eminence's strategies. We cover Ricky's evolution as an active investor, why he thinks this is a stock picker environment, and what keeps him competitive after a long and successful career. Please enjoy my conversation with Ricky Sandler.
Do you think that most great investment firms can or should be led by a single investor?

**Ricky Sandler** (2:49)
Patrick, thanks. Great to be here with you. And I believe that the answer to that is yes.
I believe that somebody needs to be CIO, needs to own it. He or she needs to have really strong lieutenants who have a ton of responsibility, who can deploy capital. It doesn't mean he's the only one deploying capital, but I think at the end of the day, management by committee is dangerous.
I do believe that a single CIO structure is important. How that all fits into someone who could be chairman and a CIO, but you need accountability at the top to set kind of direction.

**Patrick O'Shaughnessy** (3:27)
And how does that most manifest in a productive way, meaning maybe in a way that would be harder by committee or with co-CIOs or something like that? Like what are the episodes where that power becomes the most valuable in your experience?

**Ricky Sandler** (3:40)
So I'd say one, I think there is one person who is viewing all the opportunities across all the different sectors or analysts and is able to say like, I know that's a really good idea to you, but it's six other ideas over here that are better. And you don't see that because you're just looking at this world. So that's one, I think two, some single person at the top who's working with other people begins to see his people's biases.
And some people come in pounding the table, pounding the chess, great debaters, and their ideas actually mediocre. And some people come in, I kind of think this is a pretty good idea. I mean, there's some risks.
Knowing your tools and people is important, and that is hard when you're more decentralized in terms of decision making. And maybe the last point is, I think Investment Committee could lead to consensus think in ways that are not as good. I love debate by committee. And we have three sectors that we view the world from consumer, TMT, and we call it Fibo, which is financials, business services, industrials, health care, other, because that's kind of how our portfolio. And we have sector meetings every week, and we debate among a group of six to nine people. And I love that. But ultimately, I think decisions at the top are important.