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.
Topic: Long Term
We are focused on estimating business results and compounding capital over long periods of time. An investment horizon focused on decades, rather than days, months, or quarters, is a competitive advantage.

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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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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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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An Often Unexploited Advantage of a Controlling Shareholder
In October 2016, we had a discussion with the CEO of one of our companies about not surrendering the advantages of having a controlling shareholder or a small group of well-aligned controlling shareholders who have a long-term orientation. The conversation…
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The Mystery of the Missing Goods
A Brief Introduction to Price Controls: Consumers see the price of a good as an expense and therefore price increases as a burden. Producers see prices as income and therefore price reductions as a threat. This healthy tension between buyers…
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Incentive Misalignment in the Money Management Business
As we have written before, the art of successful investing requires both discipline and an even temperament. The more emotional an investor becomes, the more likely he is to buy high and to sell low – following the herd to…
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The Virtue of Inactivity
I think the [Berkshire Hathaway’s] record shows the advantage of a peculiar mind-set – not seeking action for its own sake, but instead combining extreme patience with extreme decisiveness. It takes character to sit there with all that cash and…
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Einstein, CERN and the Limitations of Models
In 1905, a twenty-six year old patent clerk named Albert Einstein upended nearly two centuries of conventional thought when his ideas of Relativity displaced Newtonian Physics. Newton’s model was useful and an enormous achievement but imperfect at explaining our world…
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Overpriced Markets
In his January 1962 letter to his partners, Warren Buffett wrote, “I have consistently told partners that it is my expectation and hope (it’s always hard to tell which is which) that we will do relatively well compared to the…
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Greedy When Others Are Fearful
The first quarter of 2009 saw continued turmoil and fallout from the bursting of the housing bubble. The broad-based decline of virtually all equity markets around the world continues to present us with attractive buying opportunities. We can give no…
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“Invert, Always Invert”
The great 19th century mathematician Carl Jacobi was fond of saying that when you encounter a tough problem, “Invert, always invert.” This principle has applications in many fields, not the least of which is investing. The purpose of investing is…
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The Danger of Leverage
As value investors, we make the assumption that the market is irrationally pricing a security now, and we expect the market to value the same security more rationally in the future. However, we have no expectation nor guarantee that the…
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