Trish and James Higgins of Chenmark Capital - Permanent Equity

**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 guests this week are Trish and James Higgins who along with James' brother Palmer run Chenmark Capital. If you've enjoyed episodes with Brent Bishore, you will love this episode because we continue to explore the style of investing that I call permanent equity. Returns in permanent equity come first from the ongoing cash flows from portfolio companies, not from reselling businesses three to five years down the line. The partners at Chenmark are pioneering this style of small business investing and share their experience with us thus far.
These are exactly the kind of people I am lucky to meet as a result of this podcast. They live and operate in Portland, Maine, not New York City. They are grinders who publish their lessons weekly in a newsletter that you should subscribe to. They describe an investing landscape that is very different than the one I am used to. This style of investing continues to have a romantic sort of appeal, but like Brent, Trish and James are quick to tell us that this life is anything but glamorous. It is hard, often stressful work, but work that is ultimately rewarding at both the personal and portfolio level.
I doubt this investing trend is going away. In fact, it is probably just getting started and we should all take notice.
I will continue to find people who can help us all understand the category of permanent equity. You can find show notes for this episode at investorfieldguide.com forward slash Chenmark, C H E N M A R K. And one last note, the name Chenmark itself is a play on question mark and is meant to serve as a reminder to plunge into the unknown. A great name and a great conversation. Please enjoy my talk with Trish and James Higgins.
I thought a fun place to start would be to maybe pick one of the three businesses, assuming there are still three, and walk through the process sort of soup to nuts because what's fascinated me about this, so this category now keeps coming up and I'm calling it permanent equity for lack of a better term, just to be able to use the term consistently. And I think what people appreciate the least because they never had to do it is how difficult the actual process can be. So I'll leave it to you to pick one and kind of walk through the process.

**Trish Higgins** (3:31)
I'll pick the first one because that's the one we were the worst at and had the most learning associated with it.
But when we decided that we wanted to find a small business to buy, we didn't really know what we were doing. So we like just went on to Google and we're like, how do I buy a small business?
And a bunch of websites come up that are most like pizzeria listings and bars and things like that. And it took us a little while sifting through those things and different websites figure out which ones made sense, which ones didn't. And when we first started, we were very informal. So we were like using our Gmail addresses to reach out to people. But then as we kind of got our sea legs under us, we started to realize there are more reputable brokers that generally the first prospectus or company you sort of see a listing for is generally not a good one. But if after a little bit of time, if you develop relationships with different brokers and tell them what you're looking for and that you're actually serious, that eventually they start calling you and saying, hey, I just got this. It fits your criteria. Do you want to take a look? And so that's how we found our first company, which was Seabreeze.