There is a well-worn path for tech startups to follow from VC firm to VC firm. Fund analysts seeking to strike out on their own have no such path to guide them. Yet, there has been a rush of former PMs opening their own shops, which should make Morningstar's article on the founding of Goodhaven of interest.

Goodhaven Capital Management was founded by two Fairholme PMs -- Larry Pitkowsky and Keith Trauner -- in late 2010. The pair left Fairholme as that firm was going through some well-publicized turmoil.

With their only competitive edge being their investment prowess, the pair took a page from Silicon Valley's playbook and lined up a key initial investor to provide seed capital, stability and some "buzz". The pair's first fund now has $91 million of AUM and they plan to close it when it hits $3 to $5 billion.

Pitkowsky and Trauner pitched Tom Gayner, CIO of Markel and chairman of the Davis Funds, on becoming Goodhaven's first separate-account client and an investor in the firm. That investment would provide capital to keep the fund's expense ratio down and serve as an endorsement of the firm's potential.

Markel was also an early investor in Fairholme in 2000.

"There's no substitute for knowing someone for an extended period of time," Gayner told Morningstar. "I had talked with them about investment ideas, and I could tell by the types of questions they were asking that they knew what they were doing." 

Edited by: Sean Hanna, Editor in Chief


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