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: Research
Our investment decisions are based on bottom-up, on-the-ground research. We travel extensively to observe and interact with a company’s customers, assess its competitors, evaluate its suppliers, meet its managers, visit its facilities, and survey its operations in action.
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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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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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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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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