Start – 0:58

1:44 – What is scuttlebutt?

• Mosaic theory: the cobbling together of information to corroborate what management teams are saying in order to make a more informed decision.

2:45 – How scuttlebutt helps investors differentiate between different shades of grey.

• Example: The discrepancy found doing scuttlebutt between the importance an Australian accounting software provider’s management team put on having their end-user accountants on the same software. The accountants had a slightly different story.

5:11 – How to get people to open up to you

• Don’t pretend to be someone that you’re not
• Always maintain a high degree of integrity

6:55 – Scuttlebutt is not commonly used in the investing world because it demands the investment of time. For long-term investors, the data gathered is worth this investment.

8:34 – Always on my mind: John can’t stop doing scuttlebutt, even in his personal life!

Key scuttlebutt learnings:

• Price is not always a customer’s main priority—there can be search costs, switching costs, or trust factors that trump price.

11:10 – A sharing culture: using M42 database to share scuttlebutt learnings with the entire research team

11:58 – Scuttlebutt can cause a dramatic shift in direction: From Bogota to Oslo

• Example: In doing scuttlebutt on a Columbian stock exchange, the team reached out to the Oslo stock exchange and found they were much more impressed with the latter. Oslo Børs is still a holding in the global small cap strategy years later.

13:12 – How the Mawer team weighs the information they learn from scuttlebutt

• Bayes Theorem: Not all information gained in terms of updating your hypothesis is the same. The rarer the information is, the better.
• Example: If you ask CEOs who they respect in their industries, they are not biased to sing the accolades of their competitors: the answers gleaned is rare and therefore, we weigh it more heavily than other information.

15:30 – When scuttlebutt can change our thesis completely and we walk away from an investment

17:24 – Rapid Fire Round: Get to know John Wilson better

• What’s the hardest part about learning to ski?
• Relating learning to ski to investing
• What John is reading (outside investing): The Effective Engineer
• What John likes best about Toronto