Quick Overview
Concentrated value investor
Focus on margin of safety and capital allocation
Typically hold 7–15 positions
41% return in 2025
Long-term goal is 20% annual returns
Welcome
I created Clayton Capital Insights as a place to document not just what I invest in but also how I think about investing.
Like many investors, my journey began with the classic value investing texts from Warren Buffett, Benjamin Graham, The Intelligent Investor, and Security Analysis among others. Early on, I believed investing was relatively simple. Find undervalued stocks, buy them, and wait.
Over time, I learned that while the value investing principles are straightforward, executing them with real money on the line is not as easy. Thus, I set out on my journey to document not only what I was investing in but also to write about my thought process and my overall investment performance.
Investing real capital introduces uncertainty, emotion, and imperfect information. It forces you to make decisions without knowing whether you’re right — and to live with those decisions over time. That experience shaped how I think about risk, valuation, and capital allocation far more than any textbook.
In 2025, I generated a 41% return, reinforcing my belief that a focused, disciplined approach — grounded in valuation, balance sheet strength, and position sizing — can produce strong results when applied consistently. While one year doesn’t mean much (I believe 5 years is the minimum with which to judge investing performance), I think it does show concentrated value investing can work.
How I Think About Investing
I focus on situations where the downside is limited and the upside might be 2 - 3x or more.
This often leads me toward underfollowed, small companies where fewer investors are paying close attention.
I look for businesses that are understandable, have strong balance sheets, and are trading at a meaningful discount to a conservative estimate of intrinsic value.
Over time, I’ve come to believe that valuation alone is not enough.
It’s important for a company to have a strong balance sheet that can withstand downturns
Management decisions and capital allocation can have a bigger impact on investment returns than most investors realize
And most importantly:
How much you invest in an idea matters just as much as the idea itself
My edge comes from combining deep value analysis with disciplined position sizing and a focus on capital structure — areas often overlooked by traditional equity investors.
My Investment Framework
While every investment looks a little different, I consistently return to a few core principles:
Understandable business model
Easy to understand exactly how the company makes money
Within my circle of competence
Aligned management
Insider ownership
Rational capital allocation
Normalized earning power
Focus on owner’s earnings
Ensure the business has had a consistent track record of profitability
Evaluate performance across cycles
Strong balance sheet
Ability to withstand adverse conditions
Limited risk of permanent capital loss
Prefer companies with high cash balances and little to no debt
Attractive valuation
Typically, less than 8 - 10x owner’s earnings
15 - 20%+ expected IRR under conservative assumptions
I prefer EV/owner’s earnings over price to earnings ratios
These principles don’t guarantee success — but they help avoid obvious mistakes.
On Concentration & Position Sizing
Most investors focus on what to buy.
I focus equally on how much to buy.
In practice:
20–30% positions → highest conviction (rare)
5–15% positions → strong ideas
1–5% positions → lower conviction or higher uncertainty
I believe:
A few great ideas drive most returns
Over-diversification dilutes performance
Cash is a strategic asset
Two Recent Investments
To illustrate the types of stocks I like, two of my top-performing investments - IEH Corp. (up 108% since my initial writeup) and Perimeter Solutions (up 84%) - both followed a familiar pattern:
Both IEH and Perimeter were under the radar and trading at a low multiple of normalized earnings
Both of these companies had strong barriers to entry in niche, underfollowed industries
Their balance sheets had limited downside risk
The market was offering up these companies at value multiples, and I believed the intrinsic value (or private market value) was worth much more than their stock price at the time I wrote about them
The market has slowly started to recognize the underlying value of both IEH and Perimeter and the stocks have re-rated and contributed meaningfully to my overall returns.
Both IEH and Perimeter reflect the type of opportunities I focus on - mispriced assets with much more upside than downside.
What I’ve Learned
Over time, I’ve made many of the same mistakes most investors make:
Buying statistically cheap stocks without really understanding the economics of the business
Overestimating my edge in widely covered large cap companies
Underestimating the role of how my emotions could affect my investment returns
Some lessons stand out:
Just buying undervalued stocks is not enough
Balance sheets and earning power matter more than narratives
Patience and a willingness to look wrong in the short-term is often a big edge
Position sizing makes a big difference in whether or not an investor can substantially outperform the market indexes over the long-term
Who This Is For
This publication is for:
Investors focused on risk-adjusted returns, not just investment opportunities with the most upside
Those interested in concentrated portfolios
Readers who value process and discipline
Long-term investors seeking to compound capital at above average rates of return
It is likely not for:
Short-term traders
Those looking for frequent stock picks
Momentum-driven strategies
How to Approach This Publication
I don’t publish on a fixed schedule.
I write when I have:
a high-conviction investment idea
a meaningful framework
or a lesson worth sharing
The goal is quality over quantity.
Start Here
If you’re new, I’d recommend:
Final Thought
My goal is not simply to find undervalued stocks.
Rather, my ultimate goal is to allocate capital in a way that compounds over time while minimizing the risk of permanent loss.
If that approach resonates with you, consider subscribing to follow along.
I like this a lot and look forward to following your journey!