One City Built to Last

explained Travis. “And then I read
all the Buffet partnership letters and
I read all of the Berkshire Hathaway
shareholder letters. What I learned
was that when Buffet was managing
smaller amounts of money in the '50s
and '60s, he posted his best results. He
had a slightly different strategy than
what he uses now.”
Buffet broke his investments down
into two major categories. The first
type were called “generals” – generally
undervalued securities, which are
similar to the types of non-controlling
investments that Buffett and Berkshire
still make today in companies such as
Wells Fargo (WFC) and IBM (IBM) .
The second type of investments were
“workouts,” which are special situations
such as mergers, arbitrages
and other situations where the investment
results would be predicated
on the outcome of a specific event, as
opposed to a reflection of the overall
market. “When the market was quite
expensive, he would overweight the
portfolios towards those workouts,
which is something I found very interesting,”
Travis remarked.
Travis instilled this strategy for
T&T Capital Management. “We utilize
things like selling cash-secured
puts on stocks that we want to own
anyway, as a way to give us a little bit
of protection when the market is expensive,
and to manufacture cheaper
entry prices in the stocks,” said Travis.
“It's a kind of derivative of his
strategy. That's a model I think which
makes us extremely unique – and one
that mutual funds, ETFs, and most financial
advisors could not emulate.”
A Down Market
Strategies like deep value investing
work well in situations such as the financial
crisis experienced in 2008 and
2009. Yet the company didn't get started
until 2011. “I wish I had the capital
that I'm managing now during the
financial crisis, because I saw things
very clearly in 2008 and 2009, in terms
of where the opportunities were,” insisted
Travis. “At that time,” he noted,
“Big firms such as American Express
and Wells Fargo saw their shares drop
to about $10 a share, and General Electric
at one point traded at $6 per share.
“It was extremely, extremely attractive
– and especially with our longterm
orientation – it would have been
the perfect time to get going,” Travis
emphasized.
As the market recovers following
those tumultuous years, pockets still
exist where T&T Capital Management
can see room for investment opportunities.
T&T Capital Management's intent
is to serve its clients. Travis said,
“Because the bottom line is, we're in
the business of helping people grow
their portfolios.”
Cash Flow
The companies that T&T Capital
Management finds most attractive are
companies that are out of favor, but
don't require constant access to cash.
“Smart businessmen buy businesses
in times of recession or downturns in
an industry,” Travis explained.
Evaluation of prospective companies
is key, reinforcing the company
research that Travis and his firm supplies
to its clients. Clients, on the other
hand, must be comfortable with that
research and allow time for investments
to turn around. He said, “We
look at things like the balance sheet,
the cash flows and the durable competitive
advantages of an operation.
If we can buy that business at a deep
discount to our estimate of intrinsic
value, we're willing to do that and engage
in what we believe to be a kind
of time arbitrage.” Travis asserted,
“If within three years we expect those
earnings to recover and the stock is
deeply undervalued, we're willing to
wait out those leaner years in the business,
because that's the time to pick it
up prior to the stock price going up.”
T&T Capital Management
Registered Investment Advisor
2211 Michelson Suite 540 Irvine, Ca 92612
Direct Line: 949-630-0263
www.ttcapitalonline.com
THE SUIT MAGAZINE p.85