About Askeladden Capital (and Poor Ash’s Almanack)
Founded in 2016, Askeladden Capital is a long-only small/micro-cap value investing firm based in Dallas / Ft. Worth. I’m Samir Patel, the founder and portfolio manager.
This site is also the home of “Poor Ash’s Almanack,” a free resource distilling over 100 “mental models” – useful conceptual models of the world that can help us make better decisions – from our notes and analysis on hundreds of books in disciplines ranging from psychology to physics. This approach, inspired by the late, great Charlie Munger, is the kind of uniquely human, cross-discipline judgment and insight that is more important than ever in the age of AI, when basic data entry and retrieval has been commoditized.
Poor Ash’s Almanack was originally published in 2018, but went offline at some point post-COVID due to a “lollapalooza” of WordPress and hosting errors. With the help of AI, it’s back online, and better than ever – all mental models now have a dedicated “AI angle.” Meanwhile, there’s reviews and analysis of 10 great new books, two completely new mental models, and content will now also be available as a weekly podcast on your favorite listening platform. (There’s more to come, too.)
As far as our investing strategy: we take concentrated positions in undervalued businesses that we believe have competitive advantages in markets with a positive secular outlook. We believe such companies have the potential to significantly increase their per-share earnings or free cash flow over time, through a combination of organic growth and sound capital allocation (whether M&A or return of capital to shareholders). We’ve become AI-first, using the right tool for the right application, utilizing the raw data processing power of AI to allow us to spend our time on the human judgment rather than data retrieval and organization.
We aim to build a portfolio of roughly 20 such companies. We are focused on years rather than quarters and typically underwrite our investments over a three-year horizon, although we are happy to hold for much longer if we believe there is substantial ongoing value creation. (For example, we have continuously owned several positions since the 2016-2017 timeframe.)
Where does the name “Askeladden” come from? I’m a native Texan, but our firm is named after a character from Norse mythology who represents our approach to investing (and the world):
“In many folk tales, the Ash Lad is looked down upon as a seemingly drowsy ne’er do well, perhaps even as a loner or misunderstood eccentric, who spends too much time sitting by the fireplace lost in thought as he is poking the ashes.
As the typical story unfolds, the older brothers, tied to conventional thinking, typically fall flat on their faces. In contrast, it is the Ash Lad who comes up with creative solutions. He is smarter, more tactical, more receptive and more aware of the needs of others. He outwits trolls… [and] ultimately saves the princess. In modern parlance, the Ash Lad is an individualist, free-thinker, and nonconformist who is capable of deep abstract, analytical thinking “outside the box,” or who can create a scientific paradigm shift. He is capable of acting as visionary or innovative early adopter.”
The path to value realization is not always linear, and patiently waiting for the market to realize the value of unloved companies can often be frustrating, particularly in an environment when trading sardines seem to just go up, and up, and up. But we believe that a company’s intrinsic value is underpinned by the cash flow it generates over time; if that cash flow is generated and thoughtfully allocated, then that will exert a gravitational pull (in an upward direction.)
Indeed, we’re often most excited by companies that have seen year after year of pressure on their stock price and trade at bombed-out valuations, so long as the fundamentals are intact; we’re fond of Don Yacktman’s “beach ball analogy.” As he describes it, undervalued stocks behave like a beach ball held underwater—the longer and deeper they’re suppressed, the stronger the rebound when they’re released.
We chose to constrain our AUM to preserve our ability to focus on the companies that are too small for most other investment firms to pay attention to; historically, a significant portion of our exposure has been in companies under $300 million in market capitalization. Indeed, for several of our positions, we are (or have been) the largest outside shareholder. Therefore, we are not actively marketing and are closed to large new institutional accounts, although we’re happy to connect in the event that anything changes in future; however, we are open to considering small accounts from individuals who have an aligned investment philosophy.
In any event, I enjoy connecting with and learning from other thoughtful investors, whether they’re fund managers, allocators, or private investors… or non-investors who just like thinking! Don’t hesitate to email me if you have a book recommendation, or want to talk about AI. I’m easiest to reach at samir@askeladdencapital.com