We Study Billionaires - The Investor’s Podcast Network

Episode: TIP726: From Obscurity to Opportunity: Jon Cukierwar’s Investment Edge
Release Date: June 1, 2025
Host: Kyle Grieve
Guest: John Sukirwar, Solar Peak Capital Partners

Introduction

In episode TIP726 of "We Study Billionaires," host Kyle Grieve interviews John Sukirwar, the founder of Solar Peak Capital Partners. John shares his unconventional investment journey, key strategies, and insights that have enabled him to outperform the S&P 500 consistently. This detailed summary captures the essence of their conversation, highlighting the pivotal moments and actionable advice for investors.

John’s Investment Background

John Sukirwar has established a remarkable track record in global investing, achieving a compounded return of 15% per annum over the past five years, significantly outpacing the S&P 500's 9% return during the same period. John's approach diverges from traditional deep value investing, focusing instead on high-quality global small-cap stocks often overlooked by Wall Street.

Key Lessons from Bob Rabadi and Value Investing

John attributes much of his investment philosophy to his time working under legendary value investor Bob Rabadi. Reflecting on this period, John emphasizes the importance of independent thinking and rigorous bottom-up research.

"The most important takeaway for me there was that they truly are independent thinkers. I would say almost radically independent thinkers."
— John Sukirwar [03:37]

He highlights how Rabadi & Co. eschewed sell-side research, relying instead on extensive data analysis and independent conclusions. This foundation in independent and analytical thinking remains central to John's investment strategy.

Shift from Statistically Cheap Companies to Quality Growth

Initially focused on statistically cheap companies and cyclical sectors such as home building and energy, John gradually shifted towards investing in high-quality businesses with substantial growth potential. This transition was influenced by his personal interests and academic experiences, notably a course at Columbia's Executive MBA program on the elements of great businesses.

"I'm looking for downside protection here and I'm looking for if something goes wrong, how far can this price really collapse relative to expectations."
— John Sukirwar [09:48]

John’s strategy now blends statistically cheap valuations with quality and growth elements, allowing him to identify rare high-potential opportunities in the small-cap segment.

Benchmarking Against the S&P 500

John benchmarks his fund against the S&P 500 despite never holding a single stock from the index. He explains that the S&P 500 is a robust benchmark due to its wide acceptance and the difficulty most managers have in beating its returns.

"Consistently around 90% of managers of mutual fund managers, asset managers, fail to beat the S&P 500."
— John Sukirwar [11:01]

By using the S&P 500, John sets a high standard for performance, ensuring that his fund's success is a testament to his specialized investment approach.

Research Process and Site Visits

John’s research methodology is thorough, akin to investigative journalism. He emphasizes visiting company sites to gather firsthand information, formulating hypotheses before each visit, and staying open to unexpected insights.

"If you're ever erring on the side of if you should do field research or not, do it."
— John Sukirwar [15:39]

This diligent approach allows him to uncover unique data points that many competitors overlook, enhancing his investment decisions.

Managing Bias and Scuttlebutt

John acknowledges the inherent biases that can arise from close interactions with company management during site visits. He combats these biases by maintaining a disciplined approach, questioning the credibility of information, and relying on comprehensive data analysis.

"It's very hard to remove bias completely, maybe impossible to remove."
— John Sukirwar [18:17]

By being aware of these biases, John minimizes their impact on his investment choices, ensuring objective and fact-based decisions.

Investment in Small Caps and International Markets

Focusing primarily on small-cap stocks, typically averaging a market cap of $250 million, John leverages the less competitive landscape in international small-cap markets. This strategy allows him to discover undervalued companies with significant growth potential that are often neglected by larger institutional investors.

"When you're looking for things small cap and develop global, you can really find companies that meet all three of these criteria."
— John Sukirwar [20:38]

John combines this focus with international diversification, avoiding U.S.-centric investments to capitalize on global opportunities.

Use of Owner’s Earnings Metric

John employs Warren Buffett’s concept of “owner’s earnings” to assess a company’s true cash-generating ability. This metric differentiates between growth and maintenance capital expenditures, providing a clearer picture of a company’s financial health and long-term viability.

"Owner's earnings is always just like the first calculation that I try to make."
— John Sukirwar [37:06]

By focusing on steady state free cash flow, John ensures that his investments have robust underlying cash flows, even if reported free cash flow appears modest.

Handling Overvaluation and Selling Winners

One of John’s significant challenges has been balancing the retention of high-performing investments with the risk of overvaluation. Reflecting on his biggest investment mistake—selling winners too early—John advises maintaining a long-term perspective and avoiding the temptation to recycle capital prematurely.

"It's just hard because with these companies over time, if you take a long enough time horizon... Err on the side of holding these stocks."
— John Sukirwar [43:48]

He emphasizes learning from past mistakes and striving to hold onto high-quality investments that continue to grow.

Fund Growth and Capacity

John plans to cap his fund at $40 million in assets under management (AUM) to maintain his investment strategy's efficacy. He believes that scaling beyond this point would dilute his ability to execute his small-cap, high-conviction approach effectively.

"I fully intend to abide by that cap."
— John Sukirwar [55:02]

By keeping the AUM limited, John ensures that his fund remains nimble and capable of seizing rare investment opportunities without compromising returns.

Investing in Boring Businesses

Contrary to the allure of flashy tech stocks, John finds value in "boring" businesses with excellent unit economics and sustainable growth. These companies often trade at lower multiples and are less prone to disruption, providing stability and long-term growth potential.

"Boring is beautiful to me, especially in investing."
— Kyle Grieve [61:02]
"It's never been by design... They tend to be at higher multiples."
— John Sukirwar [61:35]

John illustrates this with Auto Partner, a company in the auto parts industry, demonstrating how even under threat from electric vehicle adoption, a well-positioned business can sustain growth.

Management Team Evaluation

John places significant emphasis on evaluating management teams, looking for qualities such as longevity, ambition, integrity, and alignment of interests. He believes that exceptional management is crucial for a company's sustained success and resilience.

"Integrity is essential... Seeing how they think, how they feel, I think that's important."
— John Sukirwar [65:35]

By ensuring that management teams are committed and ethical, John mitigates risks associated with leadership changes and operational lapses.

Japan Market Insights

Recently, John has turned his attention to the Japanese market, attracted by corporate governance reforms aimed at enhancing shareholder value. Despite historical challenges, such as communication barriers, John sees potential in small-cap Japanese stocks by adopting a quantamental approach—integrating quantitative analysis with fundamental research.

"There's pockets of Japan in the small cap and microcap areas that have done very well from speaking to a lot of people."
— John Sukirwar [75:11]

He identifies specific catalysts, such as capital return plans mandated by the Japanese government, which can drive stock price appreciation and create investment opportunities.

Conclusion

John Sukirwar’s investment philosophy centers on independent thinking, rigorous research, and a disciplined approach to small-cap international stocks. By focusing on quality, growth, and value, and maintaining strict benchmarks against the S&P 500, John has carved out a unique niche that consistently delivers superior returns. His insights into managing biases, evaluating management teams, and exploring emerging markets like Japan offer valuable lessons for investors seeking to emulate his success.

For more detailed insights and to follow John Sukirwar’s investment journey, visit Solar Peak Capital Partners.

Notable Quotes:

• “The most important takeaway for me there was that they truly are independent thinkers.” — John Sukirwar [03:37]
• “Consistently around 90% of managers of mutual fund managers, asset managers, fail to beat the S&P 500.” — John Sukirwar [11:01]
• “If you're ever erring on the side of if you should do field research or not, do it.” — John Sukirwar [15:39]
• “It's very hard to remove bias completely, maybe impossible to remove.” — John Sukirwar [18:17]
• “Boring is beautiful to me, especially in investing.” — Kyle Grieve [61:02]
• “I fully intend to abide by that cap.” — John Sukirwar [55:02]

Learn More:

To delve deeper into John Sukirwar’s strategies and research, visit Solar Peak Capital Partners.