Charlottesville
December 16, 2021
Finally posted on January 29, 2023 in Hidden Hills
I ran across this fellow when I read an article about somebody selling their 2 acre oceanfront estate for $90 million. When I looked him up, I discovered he’s a Wahoo and has run his investment firm from the Richmond area.
The following bio came from his firm’s website. What caught my eye was the advice he would give his younger self? Of course it is easy for someone with more money than Gawd to offer up the advice he gives. But I sense a sincerity in his answer — perhaps because his advice is similar to what I would say (and I have a lot less money than Gawd)!
Under the leadership of Paul Saunders, James River Capital, an alternative investment firm based in Manakin-Sabot, Virginia, has achieved not only profitable returns but also industry recognition. In 2014, James River Capital received HFM’s U.S. Hedge Fund Performance Award and an Invest Hedge Award in the GSM $500 million to $1 billion category. In 2015, Paul Saunders’ James River Capital was recognized as a Corporate Live Wire Winner from Global Fund Awards, and an Investors Choice Award.
James River Capital began as the alternative investments department of Kidder, Peabody & Co., Inc in 1986. In 1995, Mr. Saunders acquired his division, KP Futures Management Corp., when Kidder was acquired by Paine Webber and renamed the division James River Capital.
Saunders has managed the investment products of James River Capital since 1995 and served as its Chief Executive Officer for over 25 years.
Paul Saunders was drawn to alternative investing as a career because it offered advancement on the basis of merit rather than on the basis of progression through a corporate structure. For over two decades, Saunders has made strategic investments in alternative investments to add diversity to a portfolio of traditional fixed income and equity investments.
Saunders earned a bachelor’s degree in economics from the University of Virginia in 1977 and an MBA from the University of Chicago in 1979.
James River Capital is registered with the Securities and Exchange Commission as an Investment Advisor, and with the Commodity Futures Trading Commission as a Commodity Trading Advisor and Commodity Pool Operator.
Where did the idea for James River Capital come from?
After heading up the alternative asset division at Kidder Peabody and Co., my partner and I decided to buy the division in the 1990’s and move the company to Richmond, VA. We wanted warmer weather and an easier place to raise a family than New York City. I am originally from Virginia, so that was a logical choice. I always wanted to run my own company without the bureaucracy that comes with a large international firm and with James River Capital I was able to achieve that through the buyout and relocation of the business.
What does your typical day look like and how do you make it productive?
I am a big believer in the healthy body/healthy mind concept. I have worked out in the morning my entire adult life. Working out gives me energy, carries me through the day and puts me in the right mental state to optimize my productivity so that I can more easily deal with complex challenges and decisions. Once at work my day is generally filled with responding to many emails, zoom meetings with hedge fund managers, discussions with my research analysts, numerous discussions with my business partner, reviewing various private equity investments, and general corporate management.
How do you bring ideas to life?
My experience and business acumen gives me a good gut feel for whether a business idea has a good chance of success. Since I am the head decision-maker at James River Capital, we can be quick and nimble about deciding to pursue an opportunity and making it happen. That’s another reason why I love owning my own financial firm.
What’s one trend that excites you?
I am excited by the trend of employees working from home. I am lucky enough to have great, hardworking employees at James River Capital who are just as productive (if not more productive) working from home. With the use of technology, our interface is as seamless as if we were physically co-located and I enjoy knowing my employees are experiencing a better quality of life. Happier employees are more engaged and do better work, so I love this trend. Having said that, I believe social engagement is crucial for a company’s well being and corporate morale, so a mixture of in-office and home when necessary is a great balance if possible.
What advice would you give your younger self?
When I was younger, I was more energized to take advantage of every opportunity that came along. I was running a million miles a minute and loving the action, the travel, and growing my business. That is all great, but with such an attitude and such an active schedule, one fails to stop and smell the roses and time flies by. My advice would be to run hard, as I did, but try to focus more on the moment and appreciate everything that you have at that time. Otherwise, life looking back is a bit of a blur and perhaps not as appreciated as it could have been. That thought is hard to develop when young and much easier when one is on the back nine of their time left.
Tell us something that’s true that almost nobody agrees with you on.
Money is not the answer to happiness. In fact, having a lot of money is probably a negative indicator of happiness. Of course, one needs enough money to feel financially secure, but beyond that money can become more of a hassle than a joy. One can get trapped by all of their possessions and abundance can create more stress than joy. Pure happiness is found through family and friends, the rest is just stuff.
As an entrepreneur, what is the one thing you do over and over and recommend everyone else do?
Focus on one goal at a time. Try not to spread yourself too thin and light on too many flowers. Doing lots of things may sound good and seem opportunistic, but what happens is that you lose focus and end up doing none of them well. Once you have achieved one objective then you can move on to the next project. This approach will create much less stress as well because you can generally see real progress toward a goal.
What is one strategy that has helped you grow your business?
I have always been willing to take appropriate risk when opportunities present themselves. When the opportunity is great, you have to be willing to make an outsized investment. Of course, never invest an amount that, when wrong, you are taken out of the game. Taking risks and sizing your investment size properly is critical. That is called your slugging ratio. This ratio measures the amount of money one makes on their largest investments. One hopes that your largest investments result in your best performance, not just in dollars made but in percentage made. The fund of hedge funds which I manage at James River Capital has been fortunate in that the largest investments with managers have generally had the largest percentage return amongst all the managers in our fund.
What is one failure you had as an entrepreneur, and how did you overcome it?
I have had numerous bad investments over my career. Fortunately, I have had more winners than losers. I would say that generally my losers have been driven by too much focus on the idea or product and not enough focus on the management team that is driving the bus. Great managers can almost always turn lemons into lemonade, but bad managers simply can’t get a good product off the ground. I have always realized this when selecting hedge fund managers. I never really cared what they did but was much more concerned about how they did what they do and the general passion and success of the manager himself or herself. With private equity, I took a different approach early on and focused much more on the product than the management team. While a management team is very important, ultimately the product has to be viable. Since switching gears in that direction, I have had much more success in my private equity investments.
What is the one book that you recommend our community should read and why?
“The Buddha and the Badass” by Vishen Lakhiani. It’s a book about using spirituality and mindset to optimize success in business. It was a paradigm shift for me. At this point in the current business and cultural climate, these lessons are invaluable.
What is your favorite quote?
A quote by Marcus Aurelius, “If you are distressed by anything external, the pain is not due to the thing itself, but to your estimate of it; and this you have the power to revoke at any moment.”
We all have the power to choose our thoughts about the circumstances in our lives. We can have negative, self-destructive thoughts or loving, empowering thoughts, no matter what circumstance we are dealing with. What I like about the quote is the idea that we are all the masters of our own happiness. Our happiness does not lie outside of our own control.
Key Learnings:
Keep a healthy work/life balance
Stop and smell the roses
Work hard but smart
We are the masters of our own happiness
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