Importance of Knowing Your Investment Boundaries (Sears Mini-Case Study)

Posted on 20 CommentsPosted in Case Studies, Charlie Munger, Investment Philosophy

A few months ago we had an interesting post/discussion on the site where Matt Brice and I share some of our research and investment ideas. The topic was Munger’s ability to quickly discard an investment opportunity if it was something he didn’t understand or a business he didn’t like. The comment that Munger made regarding the business of cattle ranching was one of the key takeaways that stayed with me from the 2016 Berkshire Annual Meeting—in short, the discipline that […]

What is Your Edge?

Posted on 27 CommentsPosted in Industry-Banks, Investment Philosophy, Saber Capital Management

A couple months ago I read an investment write-up on a large-cap stock that is one of the most widely followed and largest companies in the S&P 500. There was a comment that basically asked the following question: “What is your edge with this stock?” The implication of this question is that there isn’t any edge to be had with large, well-followed stocks, but there is an edge to be gained with small, underfollowed stocks. This is a commonly held […]

Two Important Investment Principles

Posted on 8 CommentsPosted in Investment Philosophy, Portfolio Management

I was recently reading through some old investor interviews from the excellent Graham and Doddsville newsletter from Columbia Business School, and I came across an interview from Glenn Greenberg of Brave Warrior (formerly Chieftain Capital). A couple years ago I commented on a talk that Glenn Greenberg did at Columbia, where he discussed his investment approach. My own investment approach tends to fall in line with Greenberg’s investment philosophy as well as his portfolio management approach. Despite a few misses […]

The Competitive Advantage of an Owner-Operator

Posted on 13 CommentsPosted in Case Studies, General Thoughts, Investment Philosophy

I gave a talk at an investing conference in Philadelphia last week where I discussed my overall approach to investment along with three broad categories where I think investors could focus to gain an edge (I’ll share the slides in a later post). I don’t attend many of these industry events, but it is fun to attend them occasionally, as I got to meet with a few Saber Capital clients who live in the NYC/NJ/Philly area as well as other […]

Practicing a “Punch Card” Approach to Investing

Posted on 20 CommentsPosted in Investment Philosophy, Investment Quotes

John Hempton, who runs a hedge fund and writes the blog called Bronte Capital, wrote a really interesting post over the weekend on investment philosophy. He basically calls out the majority of the professional money management community for cloning Buffett in word, but not in deed. His main point: many Buffett followers talk about the “punch card” approach to investing, but very few people actually implement this approach. Here is Buffett explaining the Punch Card philosophy: “I always tell students […]

Two Key Checklist Items

Posted on 21 CommentsPosted in Investment Philosophy, Investment Quotes, Walter Schloss

I am not a big fan of going through specific “checklist” items one by one when evaluating an investment idea. I know this idea has gained enormous popularity in recent years, partly due to the good book The Checklist Manifesto, and partly popularized in value investing circles by Mohnish Pabrai. I respect Mohnish a lot, and I think his idea of evaluating previous investment mistakes (both his own mistakes and especially the mistakes of other great investors) is an excellent exercise. […]

Reinvestment Moat Follow Up: Capital Light Compounders

Posted on 17 CommentsPosted in Education, Investment Philosophy

This post is the second guest post by my friend Connor Leonard, in what I hope to be a somewhat regular “column” here at BHI (by regular, I mean as often as Connor decides to put the proverbial pen to paper and share his insights with us). Based on the quality of his work, he’s welcome back anytime. Connor and I live in Raleigh, NC, and get together regularly to share investment ideas. I encourage you to reach out to […]

The Market Value Fluctuations of the 10 Largest Companies

Posted on 8 CommentsPosted in General Thoughts, Investment Philosophy, Overall Stock Market, Portfolio Management

I thought I’d put up a quick post with an interesting chart that might provide some food for thought. Considering the volatility in the past few days that was created by the surprising results of the “Brexit” referendum where the U.K. voted to leave the European Union, I thought this might be a timely topic to think about. In the past I’ve discussed how sometimes even the largest cap stocks can get mispriced from time to time (see here and […]

Calculating the Return on Incremental Capital Investments

Posted on 36 CommentsPosted in Education, Investment Philosophy

“Leaving the question of price aside, the best business to own is one that over an extended period can employ large amounts of incremental capital at very high rates of return.” – Warren Buffett, 1992 Shareholder Letter I received a lot of feedback, comments and a few questions after Connor Leonard’s guest post last week. Connor’s write-up was very well articulated, and deservedly received much praise. There were a few questions which we tried to address in comments and email […]

Importance of ROIC: “Reinvestment” vs “Legacy” Moats

Posted on 41 CommentsPosted in Investment Philosophy

I’ve talked a lot about the importance of the concept of return on invested capital (ROIC), and how it is a key driver of value in a business. Feel free to go back and read some of those posts here. In this particular post, the discussion is continued. This post is something new for BHI: it’s a guest post written by my good friend Connor Leonard (see his brief bio at the end of the post). Connor and I live […]