For this edition we welcome Dean and Deiya Pernas, Founders/Managers of Pernas Capital.
(Disclaimer: This interview is for informational and educational purposes only, and should not be seen as investment advice. Please do your own research before investing in any company mentioned).
Thanks so much for taking the time to do this interview.
Can you please tell readers about your backgrounds, and how you got involved in investing?
I’m a chemical engineer by training. I went to UC Davis and spent the first part of my career working at Procter & Gamble, Schlumberger, and eventually Monsanto, which became Bayer.
At Monsanto/Bayer, I was a lead production engineer working on three-phase reactors and nonlinear systems.
At the same time, I had also been investing with my business partner and brother, Deiya who is a former professional poker player.
There are concepts from engineering that carry over to investing.
You learn to think analytically, understand systems, identify the variables that actually matter, and work through problems from first principles.
But in a lot of ways engineering is a much more static field. The physical laws don’t change. If you understand the system and the inputs, there is usually a right answer you are working toward.
Investing is completely different in that respect.
The system is constantly changing, and there are fewer laws or first principles to draw from, so you rely much more heavily on inductive reasoning, especially when building projections about a company’s future or understanding its competitive position.
Inductive reasoning is particularly susceptible to new information because your conclusions are probabilistic rather than certain.
You have to be very good at updating your beliefs as new data comes in, which is naturally difficult for humans. Companies change, competitors react, and technologies evolve.
The first challenge is figuring out what new information is signal and what is noise. The second is knowing how much that signal should change your view.
Sometimes the quietest bit of information can drastically change your view, while the loudest news can turn out to mean nothing.
That dynamic aspect of investing caught my interest much more than engineering ever did.
I found myself spending more and more of my free time researching companies, reading filings, studying industries, and talking about investments with my brother, who by then was already working professionally in investment management.
By 2020, I decided to leave engineering and invest full-time. A few years later, we launched Pernas Research.
Can you provide readers with an overview of Pernas Capital?
We launched Pernas Capital in 2026 to manage outside capital using the same fundamental equity strategy we had been running privately for years.
The strategy is concentrated, primarily long-only, and benchmarked against the S&P 500. We own 15–25 companies and our objective is to compound capital at a higher rate than the S&P 500 over time.
Our investment philosophy is built around what we call Motor Investing. The basic idea is that active investing is the predictions business.
Reported financials tell you what a company has been, but the job of an investor is to develop a forward-looking view of what the company is becoming. We focus on the health of what generates the financials, not just the financials themselves.
A company can have strong reported numbers while the underlying business is weakening, or mediocre current numbers while the business is quietly getting stronger.
So we care a lot about trajectory over backward-looking quality metrics. We look for businesses where the underlying “motor” is strengthening and where we have a variant view relative to the market.
That can mean a bad business becoming okay, an okay business becoming good, a good business becoming great, or a great business becoming even better.
The common denominator is an inflection in the underlying trajectory of the business that has not yet fully shown up in reported financials or been reflected in the stock price.
We are officially all-cap investors but tend to find many of our opportunities in the small- and mid-cap universe, where businesses are often less efficiently followed.
Geographically, the portfolio is typically around 70% U.S. and 30% other developed markets, with an obvious preference for countries where rule of law and market structure allow value to accrue to minority shareholders.