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Norbert Lou of Punch Card Capital
Norbert Lou built Punch Card Capital around extreme patience and selectivity, typically concentrating the portfolio in only a handful of investments he understood deeply. His particular strength was identifying rare, underfollowed businesses capable of compounding intrinsic value at high rates for long periods of time.
Punch Card Capital, L.P., an Orlando, Florida-based investment partnership with $115 million in assets under management, has earned a net annualized return of 14.5 percent since its June 1, 2004 inception through September 30, 2011. Over the same period, the S&P 500 has returned 2.2 percent annualized. Thirty-seven- year-old founder Norbert Lou has achieved this return with minimal shorting, no portfolio leverage, average cash balances of 25 percent, and only one down year—a 35.9 percent loss in 2008. Over 90 percent of Norbert’s net worth is invested in the fund.
Punch Card’s portfolio seldom exceeds six positions. This concentration allows Norbert to know each position thoroughly and creates a natural discipline to filter out all but his very best ideas. To date, he has filled his metaphorical “punch card” with various kinds of value investments, from international equities to special situations and distressed debt. But most of Punch Card’s returns have come from Norbert’s greatest differentiator, a talent he has demonstrated for nearly 15 years: the ability to identify the rare undervalued and underfollowed company that can compound its intrinsic value at an extraordinary rate for long periods of time.
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