Cook & Bynum Capital Management was founded in 2001 in Birmingham, Alabama. The firm has always been partner-owned. This independence allows and promotes our dedication to consistently and steadily apply a set of long-standing core principles.
Cook & Bynum was established with an investment philosophy that is unchanged since our inception. We invest in a select few public equities from around the world that we have researched intensively and consider significantly undervalued.
Our team strives to live out the firm's CORE PRINCIPLES each day:
We organize our research process to promote continuous learning in an attempt to understand the world a little better every day. This focus supports our desire to "seek the truth," which we define as pursuing answers to questions without letting preconceived notions or existing biases influence the outcome. We invite and encourage healthy debate and deep collaboration.
Process Focused + Continuous Learning
We evaluate success by the process employed rather than the result. Luck plays a factor in all outcomes, so a better way to assess work quality is to evaluate deviations from the steady application of a sound process. Clear investment principles, hard work, consistent decision-making, and teamwork will, over time and on average, lead to good outcomes. We also look for and evaluate ways that we can continually improve our processes. This approach places the emphasis on what we can control.
Blame-Free Problem Solving
Despite our best efforts, not all of our decisions or interactions with others will meet our high expectations. On those occasions, we are dedicated to understanding why and adjusting to avoid similar outcomes in the future. Completing these post-mortem evaluations without assigning blame encourages open and honest assessments.
We strive to always operate by our golden rule: treat clients as we would want to be treated if our positions were reversed. This fiduciary standard is built on honest, open communication and accountability. To best align our incentives with our clients' interests, our partners invest exclusively alongside our clients in our funds, and all members of our team are investors as well. This incentive alignment has been important since our inception and is the inspiration for our logo.
Why the Arch?
As the supporting scaffolding was removed following the completion of a Roman arch, the responsible engineer was required to stand beneath it. This approach ensured that the engineer designed and built the arch with a substantial margin of safety.
We have applied the lessons of this highly-effective quality control system in two distinct ways:
- We demand a “margin of safety” – meaning we only buy companies at a significant discount to our appraisal of their intrinsic values. This approach to risk management serves to both prevent permanent capital loss when we make mistakes and also provide for outsized returns when we are correct.
- We believe it is imperative to have our interests closely and fully aligned with those of our investors. To accomplish this objective, we invest substantially all of our liquid net worth alongside our investors and are more than willing to “eat our own cooking.” As a result, we manage our partners’ money exactly how we manage our own.
We feel it is essential to our long-term success that we have partners who share our goals, so we seek those who are focused on long-term investment results rather than short-term market fluctuations. Having partners focusing on the latter will almost certainly compromise our long-term results.