It's not often that one's family can instill a passion within us so deep that it takes hold of our lives by the shirt collar, throwing all other future career possibilities to the wind.
For Joe Magyer, this passion was investing, and would be passed on like a baton from his grandfather, a successful entrepreneur who retired young and kept himself busy by making things with his hands and investing.
A big focus for us is asymmetric outcomes, where we're trying to find situations where we think an investment has multiple ways to win and few ways to lose.
At a very early age, Magyer and his grandfather would spend hours together discussing markets and business, while his cousins and brother reveled in the simplicity of youth, playing among the pine trees by the cabin his grandfather built on glistening Lake Burton, north east of Atlanta, Georgia.
It was here, at the lakehouse, where Magyer's grandfather would coach the future investment leader on the kinds of companies - and people - worth backing.
"While most of the kids would be out swimming or shooting things with BB guns, I would be hanging out with my grandfather, reading books and talking to him about investing," Magyer recalls.
His grandfather was big on 13th birthdays, Magyer says, and it was tradition for him to gift his grandchildren a large present to mark the occasion.
"One of my cousins got a piano, another got a hunting rifle, and he bought me 10 shares in the world's largest carpet manufacturer; I was thrilled," he says.
"I had the paper stock certificate and I would get quarterly dividend checks in the mail. So I was curious about investing from a very early age and it's been a big part of my life ever since."
This early education with his grandfather, as well as a hard-working figurehead in his father (a small business owner), helped set Magyer on his course for success.
"Between my grandfather and my dad, I guess I've had a very good perception of what it takes to succeed in the hustle and they certainly taught me to put in what it takes," he says.
Amid finishing up an undergrad in Georgia, and kicking off his career in investment banking, Magyer harboured dreams of one day working for The Motley Fool, having fanatically followed it since his teenage years.
In proving the power of the law of attraction, he would go on to nab a role with the investing advice company at its headquarters in Alexandria, Virginia, after just two years in investment banking.
Although he loved it; the people, the culture, Magyer developed an "itch" to explore outside of his comfort zone, as both a person and as an investor. And, as luck would have it, a role opened up for a senior investor within The Motley Fool's research business in Australia.
Newly married, child-free and without a home tying them down, Magyer and his wife took the proverbial plunge and packed their bags for Sydney.
"I initially started covering small caps, which was interesting because I literally knew zero about Australian small caps when I moved to the country," he recalls.
"I was thrown into the deep end of the pool."
In a way, this made for a steep learning curve, with Magyer quickly picking up the tricks of the trade.
"I had to learn about all kinds of new business models, new regulatory frameworks, approaches to capital allocation, and the differences in the way chief executives and boards think about risk," he says.
"I definitely learned a lot early on, but it was fun and rewarding."
After about a year down under, Magyer decided to start a high-conviction small cap portfolio with The Motley Fool's own capital, with readers subscribing to a newsletter to see what he was buying, when and how much.
"It developed a pretty big following and after two and a half years we were up 82% gross cumulatively, and our benchmark was up 15%. So we built up a lot of trust with our followers," Magyer says.
During this time, Magyer got to better know his colleague Donny Buchanan. Together, they realised they could better serve the newsletter's loyal followers by co-founding a fund and "actually managing money for people". And so, Lakehouse Capital was born.
"We didn't know what to expect," he says, as while The Motley Fool manages over US$4 billion globally, this would be its first foray in investment management on Aussie shores.
"We ended up getting roughly $50 million in applications in the first 24 hours," Magyer says, rightfully chuffed.
Lakehouse Capital launched its Global Growth Fund a year later and now has a team of 11 on staff.
Its Small Companies Fund has returned 11.3% over the last 12 months to September 30, and 25.4% per annum over three years. The benchmark S&P/ASX Small Ordinaries Index has returned -3.3% and 6.5% over the same periods. Since inception in mid-November 2016, the fund has returned an impressive 23.7% per annum, compared to the benchmark's 7.6%.
Similarly, Lakehouse Capital's Global Growth Fund has returned 39.4% over the year to the end of September, and has returned 25.2% since its inception at the beginning of December 2017. Its benchmark, the MSCI All Country World Index net total returns (AUD), has returned 3.9% and 8.2%, respectively.
However (and perhaps despite) these enviable returns, Magyer isn't one to rest on his laurels.
"Our investors trust their hard earned savings with us and for the average investor it's a big part of their nest egg," he says.
"That means a lot to us and we have to hustle every day to earn that."
The secret to success, Magyer says, is a sound, repeatable process.
"A big focus for us is asymmetric outcomes, where we're trying to find situations where we think an investment has multiple ways to win and few ways to lose," he says.
It is with this mindset that Magyer and his team set out to find investments, scouring local and international bourses for businesses with new products, new geographies, latent pricing power and the liquidity to make savvy, strategic investments.
Combine that with a strong balance sheet, reasonable valuation, and strong relationships with suppliers, and you will likely have a winner on your hands, Magyer says.
"We back great growth companies and we're not shy about it," he says.
"We don't try to make big macro calls or try to be all things to all investors, we don't invest in cyclical capital-hungry businesses, we don't bounce around the market, we don't try to get too cute; we have a framework that works for us and we stick to it."
And now, with two children of his own, Magyer is ready to pass the investing baton on.
"I don't want to shove them down a path," he says.
"But I will say if either of the kids wanted to go into investing, it would make me incredibly happy." fs