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…Read More
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…Read More
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…Read More
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…Read More
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…Read More
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…Read More