Joseph Shaposhnik Bets on Recurring Revenue and Fanatical CEOs
Joseph Shaposhnik, veteran investor and founder of Rainwater Equity, says the world of actively managed funds is “broken”—but he’s convinced it can be fixed. His answer: back predictable businesses led by exceptional managers.
This summer he launched the Rainwater Equity ETF (RW), with early support from legendary value investor Bill Miller. Before that, Shaposhnik spent 13 years at TCW, where he ran the TCW Compounders ETF (GRW), the top-ranked U.S. large-cap core equity fund in its class. The key lesson from those years? Companies with recurring revenue deliver the strongest long-term results.
“Recurring revenue gives management the confidence to invest in growth,” he said. “That translates into stronger earnings, higher free cash flow, and better performance for shareholders.”
The ETF reflects that philosophy with holdings like:
- Microsoft (MSFT), powered by Office 365 subscriptions.
- Broadcom (AVGO), riding AI-driven chip demand with a 46% gain this year.
- GE Aerospace (GE), led by CEO Larry Culp, with steady jet propulsion demand and projected 20% growth in earnings and cash flow.
- Constellation Software (CSU), with 75% of sales tied to long-term maintenance contracts and an elite capital allocation track record.
- Loar Holdings (LOAR), benefiting from predictable aftermarket aerospace parts sales and Europe’s rising defense spending.
Shaposhnik looks for what Warren Buffett once called “fanatical managers”—leaders who are fully committed to their companies and skilled at reinvesting free cash flow. He dislikes dividends, seeing them as capital better used to compound growth inside the business.
Why invest in his fund? He points to diversification, a record of outperformance, and resilience in downturns thanks to durable, recurring-revenue businesses.
“Benchmarks today are more concentrated than ever,” he said. “We’re building something designed to endure in both bull and bear markets.”
John Paul is the founder of DayTradeToWin, a trading education and software company established in 2008, supporting traders worldwide. His expertise focuses on price action-based futures trading strategies and structured market analysis.
DayTradeToWin delivers trading education, indicators, and software tools designed to help traders apply disciplined, rule-based decision-making across global futures markets.
He is the creator of multiple trading methodologies, including the Sonic System, Atlas Line, and Trade Scalper, which help traders identify structured opportunities in markets such as the E-mini S&P 500 (ES), Nasdaq (NQ), crude oil (CL), and gold (GC).
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