Investing in Companies That Put Shareholders First with Joseph Boskovich

Episode Summary

Executive Summary: Joe Boscovich describes Old West’s long-term, business-owner approach: buy companies with aligned management, strong ownership, and good capital allocation; ignore short-term market noise; and use patience to exploit overlooked opportunities in commodities, especially mining and agriculture. He argues active managers still have an edge in a passive-heavy market and prefers concentrated portfolios built around intrinsic value and free cash flow.

Main Topics: Long-term, businesslike investing (Priority: 5/5): Boscovich frames investing as buying and owning businesses, not trading stocks, and stresses patience, diligence, and a forever-horizon mindset once a company is chosen. Management alignment and insider ownership (Priority: 5/5): A core screen is whether insiders own meaningful stock and are paid modestly; he views high ownership as a strong sign of shareholder alignment and better decisions. Capital allocation and shareholder value (Priority: 5/5): He emphasizes that great management teams allocate capital well across five uses: reinvestment, acquisitions, debt paydown, dividends, and buybacks, with owner-managers more likely to act rationally. Active management in a passive world (Priority: 4/5): Boscovich argues the rise of passive investing increases opportunities for active stock pickers because crowded index ownership reduces deep fundamental work and creates mispricings. Commodity and mining opportunities (Priority: 5/5): Old West is heavily exposed to metals, mining, and agriculture, which Boscovich sees as underappreciated long-cycle opportunities tied to electrification, energy transition, and supply constraints. Portfolio construction and concentration (Priority: 4/5): He says the firm is comfortable with concentrated positions, often up to 10%, and uses a watchlist-driven, team-based process to build conviction before adding names. Shorting and insider-selling signals (Priority: 3/5): On the short side, the firm looks for extreme insider selling, stretched valuations, limited short interest, and weak balance sheets, while avoiding meme-stock style squeezes.

Key Arguments: Investing should be treated like owning and operating a business, not reacting to daily stock price movements. Management matters most when insiders have substantial ownership and modest compensation, because their incentives are aligned with shareholders. Capital allocation quality is a decisive edge; owner-managers are less likely to pursue bad acquisitions or waste capital. Adjusted earnings can be misleading because stock-based compensation is often excluded; Old West prefers GAAP earnings and free cash flow. The growth of passive investing has made active management more attractive, not less, because many stocks are owned mechanically rather than fundamentally. Patience is essential: when a thesis is right but unpopular, the market may take years to recognize value. Commodity investing can be highly attractive when supply-demand imbalances are misunderstood; electrification and EV adoption imply large demand for metals like copper. Concentrated portfolios can improve returns when conviction is high; Old West is willing to make large bets in its best ideas. Short ideas work best when there is massive insider selling, high valuation, and little crowding on the short side. Gold is best viewed as a standalone asset/currency/hedge rather than a standard commodity exposure.

Data Points: Family farming history: Over 100 years - Boscovich’s family has farmed in California for more than a century. Agricultural business size: 15,000 acres - He described building a farm/business across California, Arizona, and Mexico. Career length in produce business: Over 20 years - His temporary job in the family business lasted two decades before transitioning to asset management. Experience in asset management: Over 20 years - He said he has been doing investment management for more than 20 years. Proxy screen time: Within minutes - He says insider ownership and compensation can quickly determine whether an idea deserves further review. Active management fee example: 10 bps - He contrasted active fees with low-cost index investing. Uranium investment timing: Six years ago - He cited uranium mining as an example of a lonely contrarian trade made years before consensus shifted. Portfolio concentration: Up to 10% in a single name - He said that is about as large as positions typically get, though he’d like to go bigger sometimes. Sector exposure: About 40% - He said the portfolio is heavily exposed to mining companies due to a once-in-50-year opportunity. Implied sector cap: 20% maximum - He suggested 20% as a normal maximum sector exposure, with exceptions for exceptional opportunity sets. Copper content in EVs: 200 pounds per EV - He used this to support the thesis that electrification creates major copper demand. Copper demand outlook: Double over 10 to 15 years - He said copper demand is expected to rise substantially with EV and clean energy adoption. Inflation range mentioned: 4% to 5% - He described current inflation as sticky and above what policymakers want. Gold ownership by central banks: Huge - He stated central banks are major buyers and holders of gold globally. Number of companies monitored daily for insider filings: 4,000 to 5,000 - Old West reportedly reviews every form filing for every public company each day. Team size: 4-person investment team - He named himself, Brian Lax, Joe, and Chad Cook as the team. Firm age: 15 years old - He said Old West is building the firm for the long run and has been around 15 years.

Pivotal Quotes: "we're buying companies, and selling companies" — Joe Boscovich: He explained that Old West treats stocks as ownership interests in businesses, not trading vehicles. "the opportunity for active investing today has probably never been greater, maybe ever" — Joe Boscovich: He argued that passive investing has created mispricing and made active management more compelling. "why would you want to own a company where people at the company aren't excited about owning their own stock?" — Joe Boscovich: His closing lesson emphasized insider alignment as a key test for investors.

Implications: Listeners should expect a disciplined, contrarian, owner-oriented process that favors patience over market timing. For the industry, the rise of passive investing may widen opportunities for selective active managers, especially in misunderstood sectors like mining and agriculture.