Swingbridge: Investing to Win

The existence of Swingbridge is based on a core belief that wealth creation in the World is largely dependent on long term equity capital allocation of mostly US-based businesses. There are many reasons why we believe this to be the case but it is not our intent to defend or debate this view here, as those who disagree are unlikely to change their view. For us, it isn’t about winning a debate or convincing people to take on our view, rather, our singular focus is to produce the best results for our investors.

Investing is a basic activity, finding high rewards per unit of risk to drive economic returns on capital. This applies at all levels: at the company level, the portfolio level, and so forth. We call high reward per unit of risk skew and we will continue to emphasize this metric during our investment analysis, as we constantly monitor our current portfolio and assets in the market that compete for our time and dollars.

Our sole intent at Swingbridge is to win with our investment results. The best measurement  of winning is beating the appropriate index. The most commonly referenced of such is the S&P 500, but there are many arguments for other benchmarks. While we will try and articulate which benchmarks are relevant to us within any given strategy, candidly, we dont believe it matters all that much. If our investors believe we are winning against whatever benchmark is most representative of the competing market, then that is what matters. As they say ‘beauty is in the eye of the beholder’ and we don’t want to lose sight of pursuing absolute returns by being distracted by relative returns. 

We also understand the value of trading - markets have unique structures and if you take advantage of them over any period of time there are opportunities to win. That said, most trading work that is worthwhile is done over very short periods of time which requires extraordinary infrastructure costs such as technology and can create very high transaction costs such as turnover (having to find another idea quickly) and taxes (short term cap gains).

We are not traders ourselves, but we would be happy to consider an investment in ‘trader businesses’, as we have in the past. Many of these exist and just like any other business in which we conduct investment analysis, we will ultimately measure skew against the other investment opportunities available to us, and then invest accordingly with a long-term view. There are a variety of types of businesses to invest in, so how we find them is a real key to our success, and this is our constant pursuit.

Typically, large businesses have large followings and small businesses have small followings. As such, it is logical that investing in small businesses in the private markets can have very significant benefits as they are undiscovered, underutilized, etc., and there is ample opportunity for growth. As businesses get bigger, their followings get bigger, which inherently suggests less opportunities to improve those businesses. It would follow that for those large businesses, it is a better use of time to invest via the public markets, where the capital allocation strategy may be poorly understood by the public relative to our own views, and the option to take liquidity exists should our investment analysis not play out as expected.

Regardless of which side of the public vs private markets we find ourselves on in any given moment, the ability to take a longer term approach is what we believe enables us to build a thesis, grow our conviction, and execute. And that is what will lead to our ultimate success.

At Swingbridge, we are building our team out over time to win. A constant pursuit of continuing to understand the game, refining our game plan, and having the right team members to execute is paramount to our growth. This is not a new concept. That said, we are 100% committed to excellence in results. We have a thesis that drives our business and an internal set of values that support that commitment. Our game plan will continue to be refined as we evolve but that is the basic rules of the game.

If any of this is of interest to you, please don’t hesitate to reach out to us.