How We Think
These topics, which are largely excerpted from client letters dating back to our 2001 inception, provide insight into our philosophy and the key tenets that have consistently underpinned our investment approach, which has remained unchanged since our founding. These ideas and concepts are not all-encompassing but do provide a sense of “how we think” and our application of our investing philosophy.
Cook & Bynum’s Competitive Advantages
Navigating markets today is not for the faint of heart. The world is in a seemingly rapid state of flux amidst multiple ongoing wars, trade tensions, rampant populism, and rapid advances in artificial intelligence (AI), among others. In many ways,…
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Artificial Intelligence: A Cambrian Explosion
The landscape of Artificial Intelligence (AI) underwent a seismic shift in 2024, characterized by rapid evolution, intense competition, and the commoditization of foundational technologies. The large language models (LLMs) that captured the public’s imagination just a year ago are quickly…
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Focus on the Process
“Know what you want to accomplish and focus on the process rather than the outcome” – Nick Saban Nick Saban joined The University of Alabama’s football team as head coach in 2007. His coaching philosophy centered around “The Process”[1] led to…
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Our Approach to Industry Selection
Our objective as investors is to compound capital over long periods of time at the highest return possible while minimizing the chances of permanent losses of capital. We believe the best way to achieve this is to concentrate capital in…
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Impact Of Interest Rates On Profitability and Valuation
Higher interest rates have dominated market discussions so far this year, and for good reason. The U.S. 10-Year Treasury note yield has continued its relentless ascent from less than 1.5% at the end of 2021 to nearly 4.8% at quarter-end,…
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Absolute Value Investing
We scour the world for businesses that we believe can return the cost of our investment plus an additional cash return in excess of our cost under a wide range of economic and business scenarios. We only invest in a…
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The Attractiveness of Recurring Revenue
Our investment process at Cook & Bynum is guided by four criteria: circle of competence, business, people, and price. We spend countless hours performing deep research to learn as much as we can about the businesses in which our investments are…
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Archegos Capital & the Impact of Portfolio Leverage
As markets have clearly demonstrated over this past year, stocks can trade at any price in the short-term. Introducing leverage to a portfolio of stocks means this price variability can carry out an investor with a drawdown in prices. This…
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Emerging Market Bottlers
One of the key characteristics that we prize with bottlers is the underlying reliability and predictability of their earnings. In past economic downturns, the performance of these businesses was particularly resilient, as consumer demand for their goods was income inelastic,…
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The Long-Term Effect of Engagement Algorithms on Earnings
In the last decade, we have watched internet/social media companies iterate and improve user engagement first through a deluge of A/B tests and now through machine learning techniques. Powerful computers are collecting mountains of data about a wide variety of…
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Covid-19’s Economic Impact
The global economic impact of COVID-19 has been stunning. The resulting trillions of dollars of lost wealth will be borne by many, with some of the immediate impacts obvious while the longer-term, second-order effects are less clear. Just in the…
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