Allan Mecham

A meditation on distance, discipline, and the revolutionary act of doing nothing in the attention economy

Above a taco shop in Salt Lake City sits an empty office. Or maybe it doesn't. Nobody's checked in years. This is where Allan Mecham ran a hedge fund that turned $200,000 into $1.2 billion. It delivered 400% returns over 12 years. It basically made Wall Street's best minds look like they were playing with Monopoly money.

Then he disappeared.

Not disappeared like "moved to Jackson Hole and does the conference circuit." Disappeared like smoke. No LinkedIn updates. No podcast appearances. No substack.

In 2020, Allan Mecham achieved what might be the most impressive return of his career: he gave back his visibility.

This is a story about inverse relationships.

The less Mecham did, the more he made. The further he moved from Wall Street, the better he understood markets. The fewer credentials he accumulated, the more credibility he earned. It's almost like the universe was trying to tell us something.

But we should probably start with the pilgrims.

The Men Who Came to Understand

One day, a delegation of Manhattan's finest money managers, men who lunch at the Four Seasons and summer in the Hamptons, fly to Utah to meet a college dropout who works above a taco shop. They came because this nobody was beating them. Not by a little. By a lot.

For two hours, they peppered him with the questions that mattered in their world.

"Do you have an MBA?" they asked.

"I dropped out of college."

"What about your models? Your algorithms?"

"I don't use spreadsheets much. It's all in my head."

"What's your market outlook?"

"I don't know."

Brendan O'Brien, one of the pilgrims, later recalled: "Most people left the room mystified. They were expecting to see this very sharp-dressed, fast-talking guy." Instead, they found someone who violated every convention they knew. They showed up to a F1 race and found out the winner was driving a pickup truck.

The beautiful thing? Mecham wasn't being coy. He genuinely didn't use models. He really didn't know where markets were heading. He'd built a fortune on the radical premise that maybe, just maybe, you didn't need any of the things everyone said you needed.

"Activity," he once wrote, "is the enemy of returns."

In finance, this is heresy. In finance, you're supposed to DO things. Trade. Hedge. Optimise. Rebalance. Have opinions about fed policy. Mecham's response to this entire edifice of activity?

Nah.

The Cockroach Portfolio

Here's what Allan Mecham looked for in a stock: cockroaches.

Not literally. (Though given his office location, who knows.) He wanted businesses that were "cockroach-like", impossible to kill. While everyone else was hunting unicorns, Mecham was collecting insects.

While others built elaborate Monte Carlo simulations, Mecham asked basic questions: "What happens under 7-10% unemployment and 6-8% interest rates?" If your answer involves the words "pivot," "disruption," or "total addressable market," congratulations, you've found a butterfly, not a cockroach.

This led him to a philosophy he called the "hourglass model." So, we have an hourglass. At the top: tons of suppliers. At the bottom: tons of customers. In the middle, controlling the flow: one dominant company. That skinny middle part? That's where Mecham lived.

AutoZone. MSC Industrial. Berkshire Hathaway. These aren't sexy businesses. They're barely businesses, they're more like economic furniture. The kind of companies that make you yawn until you look at their forty-year charts.

But here's where it gets interesting. In 2011, Mecham didn't just buy Berkshire Hathaway. He made it 50% of his portfolio. FIFTY PERCENT. He even used margin to buy more. When asked about this concentration, he called it "the quintessential open-net tap-in goal."

The man put half his fund in one stock and compared it to scoring into an empty net. You know what? He was right. Berkshire went on a tear. But still, the sheer conviction required to make that bet separates the cockroach collectors from the butterfly chasers.

The Geography of No

Geography is destiny, or so the ancient Greeks believed. Mecham seemed to agree. Salt Lake City is 2,100 miles from Wall Street. This is not a coincidence.

Mecham chose Utah the way a monk chooses a monastery, for what it lacked. No power lunches. No ticker-filled lobbies. No accidental encounters with consensus. Just mountains, Mormons, and the kind of silence that lets you think.

"Our office," he once wrote, "feels more like an abandoned library with a couple of bums loitering around."

This wasn't false modesty. This was philosophy. Mecham understood something neuroscience would later confirm: environment shapes cognition. Surround yourself with people chasing quarterly earnings, you'll chase quarterly earnings. Surround yourself with silence, you might actually hear something.

Mecham had discovered the competitive advantage of slowness.

He read newspapers. Print newspapers. In 2016. He avoided financial media like it was contagious, which, if you think about it, it kind of is. Every CNBC segment, every Bloomberg terminal, every "markets are reacting to" headline is just noise dressed up as signal.

From his perch above the taco shop, Mecham achieved perfect distance. Close enough to participate in markets. Far enough to see them clearly. It's the same reason artists move to the countryside, not despite the isolation, but because of it.

How to Turn Down a Billion Dollars

By 2016, Arlington Value Capital managed $1.2 billion. Returns were spectacular. Investors were begging to get in. Business schools wanted case studies. The only rational move was to expand, hire analysts, maybe open a New York office.

Mecham's response? He closed the fund to new money.

"Conservatively closing at a small size (huge assets drag down returns) is reciprocation for your trust in Arlington."

Read that again. He called $1.2 billion "small." He turned down money, not because he couldn't manage it, but because he cared more about his existing investors than his potential fees. In an industry where AUM is the scorecard, Mecham chose to stop scoring.

But it goes deeper. Mecham was "fanatical about accepting the 'right' capital." He didn't want hot money. He didn't want traders. He wanted investors who thought in decades, not quarters. He'd rather have a small fund with the right people than a large fund with the wrong ones.

"Ben and I gain satisfaction from trying to be among the best, not the biggest."

This is like a basketball player turning down a max contract because it might hurt team chemistry. It doesn't happen. Except it did.

The Mistakes of a Genius

Want to know Mecham's biggest regret? He sold AutoZone at $155.67.

It went to $272.59.

This mistake haunted him, not because of the money left on the table, but because it violated his own philosophy. He'd found a cockroach and let it go. The market had spooked him into activity, and activity, as we've established, is the enemy of returns.

But here's what separates Mecham from your average genius: he admitted it. Publicly. In letters to investors. No excuses, no market-made-me-do-it, just: I screwed up.

"Most investors are their own worst enemies, buying and selling too often, ignoring the boundaries of their mental horsepower."

That last phrase, "boundaries of their mental horsepower", is doing a lot of work. Mecham succeeded not by being smarter than everyone else, but by knowing exactly how smart he wasn't. He stayed within his circle of competence like it had an electric fence.

The Reading List of a Contrarian

What does a hedge fund manager who doesn't use spreadsheets read? Not what you'd expect.

While his peers were deep in derivatives textbooks, Mecham was reading:

• "Predictably Irrational" by Dan Ariely

• "Nudge" by Richard Thaler

• History books. Lots of history books.

I like reading history of all sorts
and think it's beneficial to investing.

This makes perfect sense if you think about it. Markets are made of people. People are irrational. History is the record of human irrationality. Therefore, history is the ultimate investing textbook.

Also, you know, people love stories.

But the most important thing in Mecham's mental library wasn't a book. It was a quote from Richard Feynman: "Don't fool yourself, and remember you are the easiest person to fool."

Mecham kept this "tattooed in the back of my brain." Every investment decision, every portfolio move, every letter to investors, all filtered through this simple reminder that the biggest risk in investing isn't markets or economies or black swans.

It's the person in the mirror.

The Virtue of Nothing

In 2008, while the S&P 500 was discovering new circles of hell, Mecham's fund posted positive returns.

How?

He didn't do anything.

No hedges. No market timing. No "risk-off" trades. He just owned cockroaches and waited. While everyone else was playing defence, Mecham realised the best defence was not playing at all.

"We've never made hay by hoarding cash in anticipation of market corrections," he wrote, channeling Peter Lynch's observation that "far more money has been lost by investors preparing for corrections than has been lost in corrections themselves."

This is weapons-grade wisdom hidden in a plain sentence. The financial media complex needs you to believe that investing requires constant vigilance, perpetual adjustment, endless activity. Mecham proved the opposite: the best investment strategy is to have a strategy and then, radical thought, stick to it.

The Art of Disappearing

In 2020, Mecham sent his final letter. Health issues. Wind down over 6-9 months. Thanks for the memories.

Then: nothing.

No farewell tour. No "lessons learned" podcast. No masterclass. No memoir. The man who made a fortune by doing less than everyone else played his final move: he did nothing at all.

This wasn't just an exit. It was performance art. The ultimate expression of his philosophy. Activity is the enemy of returns? Try this: visibility is the enemy of peace.

Where is Allan Mecham now? Nobody knows. And that's the point. In an age where every fund manager has a Twitter account and a TED talk, Mecham achieved the impossible: irrelevance by choice.

What We Talk About When We Talk About Nothing

There's a paradox at the heart of the Mecham story. To tell it requires words, paragraphs, activity, everything he stood against. To truly honor his philosophy, this article shouldn't exist.

But here's what both retail and professional investors need to understand: Mecham wasn't advocating laziness. He was advocating discipline. The discipline to wait. The discipline to concentrate. The discipline to say no.

When he put 50% of his portfolio in Berkshire, that wasn't inactivity, that was the culmination of years of patient observation. When he turned down new investors, that wasn't indifference, that was fiduciary responsibility in its purest form.

Mecham understood something we've forgotten in our age of infinite information and instant execution: Sometimes the most radical thing you can do is nothing. Sometimes the best trade is the one you don't make. Sometimes the optimal strategy is to find a few great businesses, buy them, and then go read a history book.

The Empty Office

Let's end where we began. Above a taco shop in Salt Lake City, there may or may not be an empty office. Inside that hypothetical space, there's no Bloomberg terminal. No CNBC. No spreadsheets. Just books, silence, and maybe the lingering scent of carnitas.

This is Allan Mecham's monument. Not a building on Wall Street. Not a business school case study. Just an absence. A void where activity used to be.

The investing world is louder than ever. Retail traders gamify options. Professionals chase alternative data. Everyone's optimising, analysing, leveraging, trading. The noise is deafening.

And somewhere, maybe Utah, maybe not, Allan Mecham isn't listening.

He's already told us the secret. We just have to be quiet enough to hear it.

Activity is the enemy of returns. At least that’s the message here.

What are you going to do about it?

Nothing, hopefully.

That's the point.