Launch of Seaside Private Capital

From recent college graduate with zero finance knowledge to professional financier with a decade of work experience, the launch of Seaside Private Capital is only the beginning.

Seaside Private Capital (SPC) has officially launched in December of 2022, but its formation has been 7 years in the making with its roots dating back to 2015. Led by a recent college graduate with no finance background and a few thousand dollars, SPC initiated its maiden investment that would form the backbone for what the firm is today.

My name is Daniel Fas and I am the Founder and CIO of Seaside Private Capital. I graduated from the University of Southern California in 2012 where I majored in Political Science and Economic Policy.

I loved the thought of being an investor, especially after my experience day trading in my dorm room like every other college kid. I knew nothing about analyzing financial statements let alone how to read them. Starting in 2013, I realized day trading was a game for algorithms and software engineers, not the average person like myself. The only path to becoming a successful and sustainable investor was to learn the fundamentals, starting with basic accounting and corporate finance. So I enrolled in the CFA program and I made a career pivot from consulting, my first job out of college, to a small real estate private equity firm in Newport Beach, CA. After a year of studying for CFA level I and gaining work experience at my private equity firm, I started building out my knowledge toolkit to become a legitimate investor.

I asked myself, who is the best investor out there and why are they so good? In doing so I searched for "best investment track records" and came across this interesting graphic (see below, Figure 1):

Warren Buffet is considered the best investor of all time and he's been investing for over 50 years. Plenty of other individuals implementing similar strategies have been in the business for over 10+ years. What's more interesting is that there is only 1 macro investor/trader in the graphic above - George Soros. Diving a bit deeper, a significant chunk of Mr. Soro's track record came from one single trade, breaking the British Pound in 1992. That anomaly aside, it became abundantly clear to me that fundamental investing was the way to go. More specifically, value investing was the best strategy to compound wealth over the long term. What's not shown in this graphic are the track records of private equity firms like Blackstone, KKR, Brookfield, etc. All of these guys are value investors at their core. The main difference is that they take a more hands-on approach by taking majority stakes in businesses and help drive value creation themselves.

"The Intelligent Investor is by far the best book on investing ever written." - Warren Buffet

I immediately began reading books recommended by Buffet as I knew this would form the core of my investment strategy. The Intelligent Investor is considered the bible for value investors and I must agree with Mr. Buffet's quote on the book - it is the best book ever written on investing, by far. I highly recommend this book in addition to reading all of Buffet's shareholder letters.

Maiden Voyage

By 2015 I had been working in real estate private equity for almost 2 years, passed my CFA level I exam, and have been armed to the teeth on the teachings of Warren Buffet and other famous value investors. Form these teachings, I developed my investment strategy, which was rather simple - purchase companies trading below their intrinsic values and hold them for a long enough time period to realize those values.

It was finally time to implement what I learned and gain some real life experience. In November of 2015 I initiated my first purchase, buying shares of Emerson Electric (NYSE: EMR), an industrial automation company that has been around since the 1890's. I still hold those shares to this day, which have compounded at a 15% annualized return. Not a bad start. And this was only the beginning. I knew the seeds I planted back in 2015 would be the necessary groundwork I needed for the future when I had larger amounts of capital to deploy.

As I look to the journey I face ahead ahead of me, I have no idea how this will play out. I believe it will be a constant learning process and I'm sure I'll hit some potholes along the way, but that's what makes life interesting.

Here We Are

Fast forward to 2022. Humanity has had one hell of a run the past few years. We survived Covid-19, the whole world shutting down, a bear market in 2020 followed by an enormous bull market, and now another bear market as we sit here in December.

Value investing as a discipline has had a rough go over the years as unprofitable tech companies, NFTs, and digital currencies have performed extraordinarily well in a near zero interest rate environment. That seems to be changing with interest rates beginning to rise to more healthy levels. My track record form 2015 to today stands at a 23.2% IRR and a 1.41x MOIC. I prefer the IRR and MOIC metrics since I view my holdings as a long-term owner of operating companies and not just a piece of paper. I also don't believe in chasing returns, especially when they don't make sense (unprofitable tech, NFTs, Crypto, Etc.). We all have our own race to run. We all have our own goals and our methods to achieve them. I don't get distracted if someone wants to run around in circles. I'll continue to run my race and focus on the road ahead. So far I've stuck to my guns, and I'm pretty happy with the results.

Over the years I've made some mistakes along the way, as is natural. I've adapted my strategy from buying statistically cheap companies to buying higher quality companies that can grow and compound over time. It's a much more efficient strategy, tax wise and headache wise.

My portfolio continues to evolve depending on where the opportunities are. I still own a few companies that have high quality assets and are run by average management teams like Macerich (NYSE: MAC), which is not ideal but I can live with. As those positions eventually get closed out at attractive prices, I expect to redeploy that capital into long-term compounders such as GPN, BLK, and GOOG. It's all a process but I embrace it wholeheartedly.

Seaside Private Capital officially launched in 2022, but its roots date back to the first investment I made back in 2015. SPC's objective is to manage and grow my family's personal assets for the future. We target a 20% IRR on our investments with a target hold period of 3-5 years, and even forever holds for some companies. The way the math works is that a 20% IRR will double your investment every 3.5 years. We expect to achieve this through a combination of private commercial real estate investments in addition to our public security holdings. We only invest in high quality businesses where we have a high level of conviction of the underlying business valuation, which is driven by growth in revenue, EBITDA, earnings, and most importantly strong free cash flow generation. We do not employ leverage on our public market holdings.

I look forward to providing updates on the firm and our holdings by providing investment commentary throughout the year on where I see opportunities, portfolio company updates, and an annual letter. I don't intend for any of these writings to garner any attention or popularity. I despise being in the limelight. I do believe that providing thoughtful and concise writing will help keep me honest and assist my investing by forcing me to articulate my thoughts through writing out my investment ideas. If you happen to stumble upon these writings I hope it helps you along your own investment journey.

All the best,

Daniel Fas