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May You be Free from Suffering

I was deeply saddened and troubled to learn of the death last week of Charles de Vaulx. He was 59 years old. The circumstances of his death imply a lot of pain and suffering - for both de Vaulx and his family. I never met his wife or children, but I certainly feel for them given what they must be enduring at this time.

Charles de Vaulx was an investment manager. He interned with famed value investor Jean-Marie Eveillard in 1987 and continued to work closely with Eveiilard at First Eagle Funds until Eveillard retired in 2004. De Vaulx took over portfolio management duties but friction between de Vaulx and First Eagle management and owners led to de Vaulx's departure from First Eagle in 2007. De Vaulx then started International Value Advisers (IVA), which epitomized a boutique investment advisory firm: owner-operated; small number of strategies; well-defined philosophy and process; and owner-operator-portfolio managers who eat "a lot of their own cooking" by investing much of their net worth in their strategies. IVA was closed to new investors for much of its existence as IVA was that rare investment manager willing to close strategies in order to limit size and preserve investment flexibility.

In recent years IVA struggled to keep up with global stocks. As valuations rose to high levels by historical standards, cash accumulated (reflecting the perceived poor opportunity set), with the global strategy (IVA Worldwide) generally carrying 30-40% cash over the last 5-6 years. Stocks marched higher, cash yielded little, and slowly but surely investors redeemed their capital. Ultimately, de Vaulx elected to close down IVA and give capital back to remaining shareholders. That process concluded just two weeks ago but the way it was done perplexed former IVA employees and investors alike.

We first invested with IVA in 2011. We appreciated their disciplined process, even with the cash drag in recent years. Some might suggest that the financial market distortion created by government policy in the wake of the financial crisis should have been obvious. Nonetheless, we appreciated that IVA had dry powder ready should government policy fail.

Some thought the rapid decline in stocks in March 2020 might have given IVA an opportunity to put cash to work, but it was clear on the investor call that same month that de Vaulx and his co-portfolio manager, Chuck de Lardemelle, were not on the same page: de Vaulx very cautious, de Lardemelle more optimistic. De Lardamelle left IVA in July 2020, and the fund outflows only accelerated. Perhaps it was that course of events – and many long-time investors implicitly declaring they no longer trusted de Vaulx – that led to feelings of failure and unworthiness on de Vaulx's part and therefore the abrupt liquidation of IVA.

Everybody who knew de Vaulx and knew IVA understood that de Vaulx had a strong personality; that while humble in philosophy, he had a certain arrogance (certainly not the only investment manager with that trait); that he needed control; that he wasn't keen on sharing the limelight; that he took investing extremely seriously; and that he wanted, more than anything, to eventually make his way to the pantheon of value investors which included his mentor, Eveillard. But it seems most of those same people did not understand the extent to which those traits, ambitions, and de Vaulx's perception of self were intertwined.

De Vaulx's death was suicide. It's a subject I am certainly not qualified to discuss. But I'd like to humbly say this: one of the ancient Buddhist practices is Metta Bhavana, or the development of loving kindness. And one of the dimensions of loving kindness is Karuna, or compassion. Compassion and empathy for others when we encounter their suffering; but also compassion for ourselves and our own suffering.

I have no idea how de Vaulx's self-story evolved, or when it began to break down and shatter. I'm sure many who knew him feel the same way. But clearly there was a lot of suffering, and pain, and agony.

Everyone we encounter each day - those most familiar and those unfamiliar - we simply don't know the complete story about their story. Showing up to each of those encounters with some openness, some Metta, some Karuna – is so important.

Whatever your circumstance, whatever your place in the world today…may you be free from suffering.


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