Donny Buchanan is the co-founder and Chief Investment Officer of Lakehouse Capital in Sydney. Donny is a former Motley Fool Australia analyst and experienced private and public markets investor.
Donny Buchanan recently joined Owen Rask on The Australian Investors Podcast to talk about his journey, his investment process at Lakehouse Capital and so much more.
Topics & questions covered with Donny Buchanan
Ice breakers:
- Are you more fascinated by the collapse of growth stocks in 2022 or the levitation of Pro Medicus Ltd’s (ASX: PME) share price?
- In terms of fascinations, did you watch Byron Baes? If yes, why.
- If I gave you a choice of $1 million but you had to invest in 1 thing for 10 years minimum, or $250k and you could buy and sell every year and diversify, what would you choose and what would you own?
Who or what was your earliest inspiration to get into investing or finance? (Think: family, people, books, teachers, etc.).
What did you do after university until you got to Fool and Lakehouse? (tip: think of some days or stories, or people who you learned something from — think of 3 moments or people who influenced you and what the takeaway was. Reminder, working in infrastructure, doing the CFA, joining TMF Australia, etc).
What prompted you and Joe to launch Lakehouse, and how did you go about championing the idea internally? I imagine there would have been some hesitation…
Investment process
Donny, at Lakehouse, why did you choose to focus on 3 fascinations instead of the commonly accepted 5 moats (IP, economies of scale, low cost, network effects, switching costs)?
- How do you structure your teams around these fascinations?
- Do the fascinations naturally bias you to sectors?
- Are these at the top of your funnel?
What have been the best investments from each of the Lakehouse funds, and what can you learn from these businesses?
I’d like to double-click on Pro Medicus. Can you describe why you liked the business model in the early days and how you went about your DD?
What does the future hold for Pro Medicus and what are you watching?
Why are your portfolios so concentrated?
- How do you determine the optimal allocation to individual companies?
- How do you measure risk?
- How do you know when you’re wrong?
Philosophical
Who is the best capital allocator, as a CEO, that you have come across and what can we learn?
- What makes them special?
- Counterpoint: What’s a defining feature of a poor capital allocator?
If you pick one investor (e.g. author, fundie, private investor, etc.) and one CEO/manager/entrepreneur and have dinner (or a pot and a parma) with them, who are they?
Strange questions
Investing in agriculture. Have you ever invested in agriculture (farms, businesses, etc.). How does investing in agriculture go wrong?
If you had $100 million. How would you spend your day differently?
In your personal portfolio, can you share (in very general terms) what your skew towards public versus private equity is? And how you see that changing over time?
What’s one thing you believe about investing, business or life that few people would agree with you on?
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