Interview #83 : Andrew Martin (Fairlight Capital)

A Value-Focused Alternative Investment Manager

For this issue we have the pleasure of interviewing Andrew Martin, CEO of Fairlight Capital, an alternative investment manager, based in Greenwich CT.

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Read the last two editions with Peter Smith (Palm Harbour Capital) and Roger Fan (RF Capital Management) ➡️

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Hi Andrew, thanks so much for taking the time out to do this interview. 

Can you please tell readers about your background, and how you got involved in investing?

I worked for over 20 years across several financial institutions in London and New York. I worked for portfolio managers and hedge funds, primarily in the Fixed Income and Credit space, but latterly worked in Fixed Income and Equities. I think my background in Credit gives me a different slant sometimes on the kinds of investments that we analyze at Fairlight.

I originally got involved investing my own money (like many others starting that way) and discovered value investing (and had the epiphany as they say) after reading “The Intelligent Investor” and Warren Buffett’s writings in his partnership years in the late 50s and 60s. It seemed to me to be the correct approach to looking at investing.

Later I learnt more about Munger and how he steered Buffett more towards a GARP or growth approach, particularly as their AUM grew.

I had some early successes with my own investments that made me think I could try and do this in a repeatable way, Bank of America and several UK, AIM stocks.

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What type of businesses do you like to invest in?

Cheap, growing, quality businesses, with high returns on capital that are throwing off a lot of cashflows and/or have healthy cash balances and low debt levels.

Other key criterion we look for are that there is something rare, or differentiating about the company, or there has been a recent pivot in the business strategy or an inflection in their results.

Often, we find that we are invested in companies that are at an early stage of dominating their sub-sub-sector or business niche, have very few competitors, or have a unique product or service. 

Although the business criteria above sound similar to others (cheapness, growth, cash balances and ROIC), we have some internal metrics that we measure and have very high hurdle levels.

This combined with the level of searching and research means that we will often be looking at a company that is 1 in 1,000 in terms of these qualities compared to others.