Ignore the Noise. One Shot at a Time: Interview with Deep Value Investor John Davenport

When you think about investing, you probably think about picking stocks, conducting diligence, and running financial analysis. What’s less obvious is the heavy mental and emotional component that investing requires. Today I’m excited to dive deeper into the psychology of investing with public markets-focused, deep value and event-driven investor John Davenport. John is the founder of Davenport Fund Management, a boutique investment partnership that invests his own money alongside a select group of limited partners.As a deep value investor, John looks for stocks that are temporarily out of favor and trading at a substantial discount relative to their intrinsic value, meaning companies whose assets or cash flow are worth substantially more than the market currently says they’re worth. That gap is what protects the downside. The upside comes from pairing that discount with an event-driven catalyst: meaning some change that will force the market to care, thereby generating an increase in the stock price.It all sounds pretty good, but as John knows executing on the strategy is anything but simple. What he would tell you is that the hardest part isn’t necessarily finding the opportunities, it’s staying in them, and holding stocks that may be out of favor for months, even years, while simultaneously resisting the urge to invest in the hot parts of the market that keep climbing. Warren Buffett’s late partner the investor Charlie Munger once put it this way: “If you can’t stomach 50% declines in your investment, you will get the mediocre returns you deserve.” So yeah, easier said than done.Over the course of our conversation, John and I spoke about:* What deep value investing actually means, and why today’s market, dominated by indexation and the AI trade, has made it both a brutal and an opportunity-rich environment* How John has learned to manage the psychological side of deep value investing* Why it’s important to get away from your desk* Learning to trust gut feel as unconscious pattern recognition and the cost of ignoring it* The mental models he’s carried from competitive golf into the markets This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit 90percentmental.substack.com