Whiteout Capital
Private investor.
Contact
Email: whiteoutcapital@gmail.com
X/Twitter: https://twitter.com/whiteoutcapital
MicroCapClub: whiteout
VIC: whiteout
Important
Nothing I write is investment advice; please review my full legal dislaimer.
My background
My name is Zack, but I sometimes go by the pseudonym, “Whiteout.”
I grew up next door to a hedge fund manager who sparked my initial interest in investing. I started managing my first brokerage account in 2007 when I was 14. I’m a member of Value Investors Club and MicroCapClub.
My professional career is in tech, where I co-own a small, profitable enterprise software company.
Public writeups
8/10/23 - California Nanotechnologies (TSXV.CNO)
5/25/23 - Kraken Robotics (TSXV.PNG)
4/6/23 - Hurricane Energy plc (AIM.HUR)
My strategy
Low turnover, long duration
I focus on building positions in companies I believe I can own for many years, if not indefinitely. Each year, my goal is to find one new investment and sell nothing.
Exceptional management
I’m believe that one of the primary drivers of long-term returns is a management team that can constantly adapt to stay a step ahead of the competition and evolve the business.
Unique and durable
My ideal investment is a one-of-a-kind asset that appeals to the collector in me. Unique assets, especially those run by exceptional management teams, are typically durable and able to maintain a competitive advantage over long periods.
Profitable, high ROIC, and expanding TAM
I search for companies that are profitable, can reinvest those profits at a high ROIC to grow the business, and are in an industry with growing TAM.
I will sometimes initiate a position in an unprofitable company if I think profitability is near, but high ROIC and growing TAM are always a requirement.
I don’t rely on reported ROIC and focus my energy understanding the business so that I can project a long-term ROIC, which can often differ greatly from what might show up in a screener.
Reasonably priced, often small
I’m not a deep-value investor, but I’m also not willing to pay unreasonably high multiples. I focus more on avoiding overpaying than searching for bargains. I spend a lot of time in microcaps, but own company’s of all sizes.
Qualitative over quantitative
While I do require all of my investments to meet certain financial standards, I focus more on qualitative factors and put more weight on speaking with management, understanding the competitive landscape, and going on site visits when making investment decisions.
Notable assets (>3 year hold)
Netflix (2008-2019)
Amazon (2009-2019)
Monarch Cement Company (2018-present)
Crypto basket including ETH, HNT, MATIC, CHZ, INJ, & ATOM (2019-present)
Constellation Software (2019-present)
Centrus Energy (2020-present)
Long-form Bio
My name’s Zack. I’m an entrepreneur and private investor.
During the day, I co-own a profitable, bootstrapped enterprise software company. We have two main lines of business: (1) data analytics apps for small and medium-sized businesses in a niche market and (2) long-term contract, mission-critical software for a large multi-national OEM.
I also started Gridiron AI with a couple of friends back in 2018 as a fun side project. We’ve developed machine learning models that predict fantasy football scores and NFL game outcomes with elite (though imperfect) accuracy.
I grew up next door to a hedge fund manager and was inspired from an early age to learn how to invest. He’s mentored me over the years and to this day we still share investment ideas.
I started managing my first account when I was a teenager during the GFC crash. It was a great time to start investing and I got lucky early by buying stock in two of my favorite companies, Netflix and Amazon.
I source ideas from a variety of places. Most of the time, I find companies organically either through screens or combing through companies A-Z. I’m also a member of Value Investors Club and MicroCapClub and consider those to be valuable parts of my process.
My dad started a small business in the construction industry with my grandpa a few years before I was born. I spent a lot of time growing up on job sites and at his office in Denver. My first job was doing accounts payable/receivable, but as I grew older I got to help with more of the fun stuff, like demolition and driving dump trucks.
My dad inspired me to pursue building businesses—when people asked me what I wanted to be when I grew up, I’d tell them I wanted to own a company like my dad. The first business I started was with a friend in elementary school. We shaved the paint off of wooden pencils, carved intricate designs into them, and then sold the finished product at recess. Eventually, we started taking custom orders to include people’s initials, favorite animals, etc. We sold them for $5-10 each and I had a blast doing it.
In middle school and high school, I became obsessed with video games. The first time I made money off of gaming was at a Madden tournament when I was probably thirteen or so. It was nothing near the level of competitions that happen these days, but there was a $500 prize and people flew in from out of state to compete. I played as the Broncos, which everyone gave me flack for because they were not one of the highest-ranked teams. Long story short, I ended up beating a middle-aged guy from California to win the tournament. He was not a gracious loser.
I always loved beating campaigns, so I got a subscription to a site that was like the old Netflix where you could rent games and they’d mail them back and forth as you finished (was it called Red Alert?). Over the course of a few years, I climbed into the top 10 on the Xbox Gamerscore leaderboard. Then, for the first time, someone offered to buy my account. I said no, but that got me thinking about ways to fill the demand for accounts with high gamerscrores.
As I did research online, I read on forums that you could disconnect your Xbox hard drive, hook it up to a computer, and copy the achievement files between accounts. I ordered a SATA cable, made a new Xbox account, and figured out how to copy some of the achievements from my account into the new one. I then listed it on Ebay and sold it for $250. I’m not sure how many accounts I sold, but it was quite a few. I had options on Ebay to customize the games beaten. Some of the accounts sold for upwards of $500. This is the first project that got me interested in computers.
I studied applied mathematics in college and graduated from CU Engineering with a 3.98 GPA (damn you freshmen lit, it could have been a 4.0!). In my junior year, I started working at a VC-backed tech startup in Boulder. I ended up working there nearly full time my senior year, as I only had three courses per semester, and then I continued on to a salaried Data Scientist role after I graduated.
I met a lot of awesome people at this startup who continue to be good friends to this day. We had a successful exit and were purchased by one of the richest families in the world. It was an awesome experience to have at such a young age and I enjoyed it, but I also knew the VC-backed startup culture was not for me. Growing up around a small business that my family depended on, I did not understand how you could call it a business if you weren’t at least trying to make a profit.
This inspired me to get into profitable software, which is where I still work full time and described above. I’ve worked fully remotely since late 2015, which has enabled my family to travel a lot, including a two-year stint where we lived nomadically all over the US and Europe with our dog. That was quite the adventure.
On the personal side, I’m married and we have two sons, one human who was born in December 2023, and one canine who we treat like a human. I have a large family that is almost entirely located on the Front Range of Colorado. My siblings and cousins were some of my best friends growing up and continue to be to this day. Family is very important to me and it feels surreal that my wife and I have started the next generation.
In my free time, I enjoy cooking, playing board games, writing fiction, hiking, and traveling.
Enjoy the journey,
Zack