Case Studies

The Competitive Advantage of an Owner-Operator

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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 […]

Investment Philosophy

Practicing a “Punch Card” Approach to Investing

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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 […]

Investment Philosophy

Two Key Checklist Items

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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. […]

Education

Reinvestment Moat Follow Up: Capital Light Compounders

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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 […]

General Thoughts

The Market Value Fluctuations of the 10 Largest Companies

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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 […]

Education

Calculating the Return on Incremental Capital Investments

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“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 […]

Investment Philosophy

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

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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 […]

General Thoughts

Warren Buffett 1998 Talk at University of Florida

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I spent some time traveling in the car last week. Whenever I am driving by myself, I always listen to something—usually related to business or investing. I keep a long list of videos of interviews or talks that I can pick from whenever I am in the car. On this particular short trip, I had got through two different videos. I listened to this talk from 2012 where Jeff Bezos talks about Amazon Web Services—the cloud computing services business that […]

General Thoughts

General Thoughts on Portfolio Management and Diversification

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“Ship your grain across the sea; after many days you may receive a return. Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land.” –Ecclesiastes 11:1-2 Investors have always discussed and debated the merits of diversification—apparently even as far back as the days of King Solomon (although his definition of diversification—7 or 8 “ventures”—might not sit well with modern day portfolio theory and mutual fund managers who often hold 30, 50, or 100 […]

Case Studies

Valeant, Short Selling, and the Too-Hard Pile

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In general, I find reading short reports to be a very valuable exercise. I don’t do much shorting in my partnership, but I find that for the most part, short sellers provide a useful service to the capital markets and I think that the good short sellers (who are few and far between) often do more thorough investigative analysis than the vast majority of long-only investors. For a good book on shorting, I recommend reading Scott Fearon’s book called Dead […]