Podcast Summary: TIP770 – Mastering the Markets w/ Andrew Brinton

Podcast: We Study Billionaires – The Investor’s Podcast Network
Host: Clay Finck
Guest: Andrew Brinton, CEO & Co-Founder, Turtle Creek Asset Management
Date: November 21, 2025

Overview

In this engaging episode, host Clay Finck welcomes back Andrew Brinton, co-founder and CEO of Turtle Creek Asset Management, to discuss market inefficiencies, the evolution of value investing, and insights into standout portfolio holdings. Brinton shares perspectives on why public markets are less efficient today and how his firm identifies value amidst market euphoria, particularly examining their investment theses on Floor & Decor and Kinsale Capital. The conversation weaves practical investing wisdom with actionable strategies, emphasizing patience, discipline, and deep business analysis for long-term market success.

Key Discussion Points & Insights

1. The Efficiency (and Inefficiency) of Markets

[01:30 – 07:09]

• Importance of Market Efficiency:
  Brinton explains that the core purpose of markets is to allocate capital to deserving entities at fair prices—a foundation of capitalism. Efficient markets should guide allocations, but the process of price discovery remains inherently complex.

  • Quote: “How do you get information...to figure out what a company is worth and what you should pay for shares...is absolutely a critical component of the modern world.” – Andrew Brinton [02:02]

• Cliff Asness’ “Less Efficient Market Hypothesis”:

  • Key drivers of declining efficiency: Passive flows (index funds), prolonged low interest rates, and technology/social media-induced herding effects.
  • Brinton concurs with Asness, noting that while frenetic trading and reaction to news have increased, this does not equal true price efficiency.
  • Quote: “Markets are reacting to every new piece of information, but that doesn’t mean they’re getting it right... It’s the greatest economic error in the 20th century.” – Andrew Brinton paraphrasing Robert Shiller [05:05]

• The New Structural Shift:

  • Major structural change is the shift from long-term fundamental managers to short-term, quant-driven managers, leading to shorter time horizons and more mispricings.
  • Brinton adds a fourth factor: the focus on short-term trading over diligent, long-term research.

2. Human Bias, Behavioral Finance & Patience

[07:09 – 13:10]

• Behavioral Biases in Markets:

  • While behavioral finance highlights biases like loss aversion and extrapolation, Brinton believes diligent, fundamental work neutralizes these effects for informed investors.
  • Quote: “If you have a good fundamental view and believe there is no informational content in the share price, a declining share price doesn’t fuss you.” – Andrew Brinton [07:09]

• Inefficiency Durations:

  • Market mispricings now take longer to resolve; inefficiencies sometimes persist for 5+ years.
  • Quote: “It takes longer today than a decade ago…The mispricing is greater, but you have to be willing to wait longer.” – Andrew Brinton [11:21]

3. Comparing Today’s Market to the Dotcom Bubble

[13:10 – 16:21]

• Is This Another Tech Bubble?
  • Today’s euphoria in tech/AI shows strong similarities to the late 1990s.
  • Investors are chasing “thematics” rather than doing granular company analysis.
  • Quote: “History doesn’t repeat itself, but it rhymes...You expect a bubble once in your lifetime... It feels very similar to the dot com bubble.” – Andrew Brinton [14:34]

4. Deep Dives: Portfolio Holdings

A) Floor & Decor

[20:29 – 38:34]

• Company Overview & Value Proposition:

  • Disruptor in hard-surface flooring; “democratized” access via efficient supply chain, direct procurement, and big-box stores.
  • Business structurally outcompetes Home Depot/Lowe’s with cost advantage.
  • Quote: “Their structural cost advantage...is shocking. They cut out the middlemen...It’s a true disruptor.” – Andrew Brinton [20:29]

• Buy & Optimize vs. Buy & Hold:

  • Turtle Creek optimizes allocations as valuations move; core is buy-and-hold, but portfolio weights are continually assessed to maximize returns.
  • Quote: “We are at core a buy and hold mentality...But...if you don’t want to sell a stock at $100, you didn’t own enough at $60.” – Andrew Brinton [25:10]

• Cyclicality & Value Traps:

  • Company’s weakness is cyclical exposure to housing, but long-term runway and share gains outweigh temporary downturns.
  • Reduced store openings is a conservative, strategic move.
  • Quote: “We don’t spend a lot of time thinking about when the turn happens...we’re looking out five, ten years plus.” – Andrew Brinton [29:33]

• Valuation Approach:

  • Uses a consistent 10% discount rate for intrinsic value, focusing on normalized earnings and long-term cash flows, not GAAP P/E multiples.
  • Quote: “Our view of intrinsic value is well above 120...We just let the noise of the market wash over us and take advantage of that noise.” – Andrew Brinton [35:52]

B) Kinsale Capital

[44:26 – 53:29]

• Company Overview & Moat:

  • Specialty insurer with major technological and cost advantages—operates more like a tech company than a traditional insurer.
  • Focuses on profitable niches, avoiding large, self-insured corporates.
  • Quote: “It’s much a technology company as it is an insurance company...They just want to write good business.” – Andrew Brinton [45:26, 48:51]

• Market Share Opportunity:

  • Only 1.5% current share in a $130B market; Brinton expects that to increase significantly over time.
  • Quote: “Will they be 5% market share...I think it’s inevitable.” – Andrew Brinton [48:51]

• Rational Capital Allocation:

  • Emphasizes shareholder-friendly capital returns, including buybacks only at a discount to intrinsic value—echoing “Outsiders” philosophy.
  • Quote: “Why wouldn’t you...buy 100% of the shares from your shareholder who has the lowest opinion of what you’re worth?” – Andrew Brinton [53:29]

5. Sticking With the Strategy During Underperformance

[56:06 – 59:55]

• Enduring Market Underperformance:
  • Turtle Creek is currently underperforming the index, but Brinton remains confident in the long-term process and emphasizes focusing on business underlying value rather than short-term mark-to-market movements.
  • Quote: “I didn’t need to have a few good years to know that owning high quality companies...over the long term, that’s the right approach.” – Andrew Brinton [56:46]
  • Active share is nearly 98%—the portfolio is nothing like the S&P 500—so periods of divergence are expected and accepted.

Notable Quotes & Memorable Moments

• On Market Efficiency:
  “They’re not less frenetic, they’re not less liquid...if you think efficiency means...getting reasonably close to fair value, that’s not what we see today.” – Andrew Brinton [03:35]

• On Value Investing Mindset:
  “If you understand that very, very few people...are actually doing that fundamental work, a declining share price doesn’t fuss you.” – Andrew Brinton [07:09]

• On Buy & Optimize:
  “We are a buy and hold. Unless Floor and Decor's valuation goes through the roof, we’re going to own this company for a long time. But the amount that we own is...the margin of safety.” – Andrew Brinton [25:10]

• On Kinsale Management:
  “We speak to them...almost in a way of waiting for them to say something stupid. Kinsale has never said anything stupid to us.” – Andrew Brinton [45:26]

• On Share Repurchases:
  “If you can buy our stock at a discount to the intrinsic value, that creates value for our shareholders.” – Andrew Brinton [48:51]

• On Performance Discipline:
  “We print a change in intrinsic value...trying to communicate, hey, this is how the portfolio is doing. The economy has been a headwind for some of our companies...It’s business as usual.” – Andrew Brinton [56:46]

Timestamps for Key Segments

• [02:02] – Brinton elaborates on why efficient markets matter
• [03:35] – Discussion of Cliff Asness’ “less efficient” hypothesis
• [07:09] – Brinton on behavioral biases versus fundamental research
• [11:21] – How long market inefficiencies last today
• [14:34] – Comparing today’s AI/tech hype to the 1999 tech bubble
• [20:29] – Floor & Decor: investment thesis and business model
• [25:10] – Buy and optimize vs. buy and hold explained
• [29:33] – Navigating cyclicality, value traps, and industry outlook for Floor & Decor
• [35:52] – Valuation philosophy and margin of safety approach
• [44:26] – Kinsale Capital: unique strengths and market opportunity
• [48:51] – Market share potential, capital allocation moves, and management discipline at Kinsale
• [56:46] – Handling underperformance periods and sticking with the investment discipline

Conclusion & Resources

Andrew Brinton provides a masterclass on value investing, underscoring that real edge originates from deep business understanding, disciplined patience, and willingness to act against prevailing market currents. Those interested can learn more about Turtle Creek Asset Management at turtlecreek.ca (with full resources available for international users).

“What we do is we own a collection of high-quality companies at the most attractive valuations. It's inevitable in this environment that we’re going to lag. It's happened before and guaranteed it’s going to happen again. But we stay the course.” – Andrew Brinton [59:55]