In June, the Oklahoma City Thunder won the NBA Championship. In my mind, it was one of the most well-deserved success stories in recent memory. Their General Manager, Sam Presti, has built two (actually almost three) title contending teams in his 18 years as GM.
Imagine for a moment what it must be like
to run a professional basketball team in Oklahoma City. They are technically
the third smallest market in the league, ahead of only New Orleans and Memphis,
but they are arguably less “famous” than those two. In other words, if you were
a budding super star, a young belle of the ball coveted by all the teams in the
league, where would you prefer to live, New York, L.A., Miami, Chicago? Or…
Oklahoma City?
Thus the built-in handicap of being in a
location much better known for petroleum exploration: star players generally
want to play under brighter lights. Unlike the L.A. Lakers, who can attract the
services of LeBron James, The OKC Thunder must rely on draft picks, player
development, opportunistic trades, and a culture/ethos that can keep the
homegrown stars home.
Building a high functioning organization in
any business, any industry, share many common denominators. Sam Presti has done
it, with one metaphorical hand tied behind his back no less. I have watched
many hours of his marathon pre- and post-season press conferences over the
years, mesmerized by how similar his philosophies are with value investing[1].
To wit:
·
Instead
of splashing out for flashy free agents or make blockbuster trades, he opts to
collect draft picks, then nurture the young talent that come from those picks.
Instead of chasing hot stocks or trying to get allocations to hot IPOs, we
value-oriented folk prefer to find hidden gems that are initially ignored by
the collective, then patiently wait for them to flourish.
·
Instead
of chasing players that are coveted for their statistical output in the hot
strategy du jour (e.g. 3-point shooting), he focuses on players that can stack
quality possessions (e.g. tenacious defenders that can force turnovers).
Instead of recycling the same valuation metrics to determine if a company is
mispriced (e.g. P/E ratios), I try to gleam if there are hidden or buried
intangibles that have a high probability of becoming cash in the future.
Perhaps most poignantly is his mantra that to
be exceptional, one must be willing to be the exception. And its inverse:
to be an exception, one must be exceptional. To beat the S&P 500, to be
exceptional, we must aspire to be an exception and compose our investments in a
way that is substantially different from that powerful benchmark.
Success is never guaranteed. Luck and uncertainty remain untamable wildcards.
Best any of us can do is to play the odds the rational way through relentless
self-improvement and humility and wait for the breaks of the game to favor us
on occasion. The OKC Thunder’s 2025 NBA championship trophy is proof that it
works, and it is why I was so enthralled by their incredible season.
I’ll share one last lesson from Sam Presti
that has stuck with me, actually a lyric formally attributed to the band A
Tribe Called Quest – but I hadn’t heard of it until he quoted them:
[1]
On the flip-side, ex-Philadelphia 76ers GM Sam Hinkie, upon his resignation in
2016 after losing a power struggle, leaked a self-serving letter that
name-dropped investing luminaries like Buffett, Munger, Seth Klarman, and
Howard Marks. Hinkie is a perfect example of an empty intellectual, a belly
full of read knowledge but unable to translate any of it into actual results; and
when held accountable, lashes out with highfalutin words. He has not held
another management position in the NBA since.
