Investment Thesis so stupid it's smart

June 19, 2023

by an member in San Juan, Puerto Rico

Search Funds will often pass on a deal that isn't "perfect"
- I reach out to you and ask if I can take a look at any deals you pass on.
- Thankfully you just did all my homework.
- I'll take a look at the passed deals + the DD, and then make a deal happen anyway.
- My investors may not get the "best" deals, but they'll get "good" deals that may even turn out to be a "great" deal
- Especially true if it weren't for your short-sightedness of needing to make a perfect deal happen.

How stupid (or smart) is this approach?

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Reply by a searcher
from Virginia Polytechnic Institute and State University (Virginia Tech) in Blacksburg, VA, USA

I wouldn't call it an investment thesis, but it's reasonable. Just because someone passed doesn't mean it's not a great deal. We frequently pass on good deals because they either aren't in our strike zone (e.g. too small or not sufficient alignment with the rest of the portfolio), or, more recently, because we already have more than we can handle. We try to help out friends by passing along the contact to see if they'd be interested in the deal. You can often eat very well off of someone else's table scraps.

Reply by a searcher
from University of South Carolina in Great Falls, VA, USA

It's interesting, like probably many other searchers I score dozens if not 100 opportunities a week, requests scores of CIMs, talk with huge amount of brokers and try to fill my calendar with seller meetings. I have a ton of deals that are "Almost" there but not quite right. So getting them and using your scoring on the near great deals of others should help, but why are folks going to share them with you?

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