Vista Equity Partners Standard Operating Procedures

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Robert Smith is the Founder, Chairman, and Chief Executive Officer of Vista Equity Partners. A March 2018 Forbes profile described Vista’s performance: “Since the firm’s inception in 2000, Vista’s private equity funds have returned 22% net of fees annually to limited partners, according to PitchBook data. Annual realized returns, which reflect exits, stand at a staggering 31% net. His funds have already made distributions of $14 billion, including $4 billion in the last year alone. Not surprisingly given those numbers, Vista has become America’s fastest-growing private equity firm, managing $31 billion across a range of buyout, credit and hedge funds.” Vista owns many businesses including Marketo, Tibco, Omnitracs and Infoblox to name just a few. You can find a full list on Vista’s web site. • “We are very disciplined buyers.” “You think about Warren Buffett and Henry Kravis, and to a great extent, Columbia seems to mint a whole bunch of people who understand value investing and go about it in a different way.” In addition to degree in chemical engineering from Cornell, Smith obtained an MBA from Columbia University Business School. There is little doubt that at Columbia Smith was taught that value investing as an analytical style is very different from value investing as a statistical factor in an index fund.

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We know how difficult it is to build a great company, so our goal is to find companies led by exceptional individuals that can benefit from our proprietary operating procedures. Project Realize, the initiative started by Vista Equity Partners’ Founder and CEO Robert F. Smith, aims to help good businesses reach their full potential.

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When you hear someone say something in the news or on social media like “Value stocks were up [or down] today” they are either (1) talking about value as a statistical factor or (2) are confused about the difference. To illustrate, the difference, Charlie Munger was not talking about value as a statistical factor when he said: “All intelligent investing is value investing — acquiring more that you are paying for. You must value the business in order to value the stock.” What Munger means is: are there any types of intelligent investing where the objective is to pay more than an asset is worth?

Mar 3, 2018 - Vista Equity Partners Standard Operating Procedures. Today, Vista Equity Partners has approximately $6 billion in committed equity capital. The firm, founded by Robert F. Smith, uses a disciplined, scalable process to evaluate investment opportunities and achieve maximum value-add for all transactions. Not every buyout firm that raised a fund in 2007 can say that it is on track to triple its investors’ money, but Vista Equity Partners isn’t your average private equity firm.

There are some assets for which an intrinsic value can’t be easily computed, but that is a different question than whether an asset should be purchased at a discount to its value. A business like Apple or Amazon can be a value stock if you are engaged in value investing as an analytical style. A disciplined buyer like Vista only buys a security or asset when they can make the purchase at a price which represents a bargain when compared to its value. Buying an asset for more than it is worth hoping some greater fool will buy it for even more in the future, is neither disciplined nor investing.

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Another Columbia graduate named Warren Buffett believes: “The very term ‘value investing’ is redundant. What is ‘investing’ if it is not the act of seeking value at least sufficient to justify the amount paid?

Vista Equity Partners Standard Operating Procedures

Consciously paying more for a stock than its calculated value — in the hope that it can soon be sold for a still-higher price — should be labeled speculation.” Another point that has been made by Munger is also relevant to what Smith is talking about in the first quote in bold above. Munger has made it clear several times that Berkshire is a buyer of moats. Munger has said: “We buy barriers. Building them is tough.” Vista is also a buyer and not a builder of moats from scratch.