We Study Billionaires - The Investor’s Podcast Network TIP731: Owning Best-in-Class Businesses w/ Joseph Shaposhnik
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Jun 20, 2025 
Joseph Shaposhnik, manager of the newly launched Rainwater Equity ETF, shares his insights on investing in businesses with recurring revenue. He discusses lessons learned from his day with Peter Lynch and critiques the broken active management industry. Joseph emphasizes the advantages of ETFs over mutual funds and explains why recurring revenue is crucial for stability and growth. He also reveals his top stock pick for the next 20 years and discusses his fascination with the aerospace aftermarket industry.
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Active Management Industry Flaws
- Active management is broken due to benchmark obsession, overconfidence, and neglecting management evaluation.
- Investing only in predictable, recurring revenue businesses with exceptional management can improve success.
Bill Miller's Cornerstone Investment
- Bill Miller, a legendary investor, provided cornerstone investment backing to Shaposhnik's Rainwater Equity ETF.
- Miller was drawn to the fund's different investment approach from his own.
Why Recurring Revenue Matters
- Recurring revenue businesses provide predictable cash flows, fewer surprises, and durability in recessions.
- These businesses empower confident capital allocation and better alignment of management incentives.