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.
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…
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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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Cook & Bynum as a “Conglomerate”: Bottlers, Broadband, Brewers, & Berkshire
One way we think about the Fund’s portfolio is as a conglomerate comprised of eight carefully selected companies that are organized into five principal divisions with significant operations on five continents: (1) a geographically diversified bottler, (2) a leading telecom…
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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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Thoughts at the Onset of the Pandemic
It has been decades since the entire world simultaneously altered its behavior in such an extreme and sudden way. It has been even longer since a global health crisis was the cause. We are saddened by the toll that it…
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Competitive Advantages, Growth, Economic Resilience, and Strong Balance Sheets
We have written in the past about how we consider the relationship between price paid for and expected returns from an investment to be a “law” of investing: the higher the price one pays for a stock, the lower long-term…
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No, Not Now, Too Hard, or Never
The portfolio update sections of our letters almost invariably share only the buy and sell decisions that we do make, rather than the ones that we do not. Meanwhile, we spend most of our time evaluating investment opportunities that we…
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Where We Are Looking For Value
Previously, we shared the year-to-date results for several international indices and discussed how short-term volatility creates opportunities that we work to exploit. Longer-term returns for this group of indices are even more interesting. This chart shows their performance against the…
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