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: People
We are focused on investing alongside management teams, board members, and substantial shareholders who are capable and trustworthy, employ conservative accounting policies, make wise capital allocation decisions, and treat investors as partners. Appropriate alignment of interests lowers the risk of permanent capital loss.
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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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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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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Focus On The Customer’s Decision
Earlier this month, Kraft split into a faster-growing international snacks business and a slower-growing domestic foods/grocery business. Despite neither of the companies’ fundamental business prospects changing one iota, the market reacted to the news by trading both of the stocks…
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Expanding Our Geographic Circle of Competence
We were able to spend a great deal of quality time with many levels of management in one of our core holdings and to get a much better understanding of what is actually happening on the ground. This company’s management…
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The Psychology of Errors
An important differentiator between our selection process and the processes of the value managers we respect is the time and effort we spend on analyzing how psychological factors affect decision making. A number of different factors cause people to systematically…
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