We have to manage a capital-intensive business, but using all of the levers that software gives us… those are all the things that I think will generate great ROIC — and this is probably unique. — Satya Nadella, March 2026 Download the Slides Deck: The__190_Billion_Absorption Listen to the deep-dive discussion – Microsoft’s 190 Billion…
Author: J. Dubé
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The Price of Free Growth
Truly great businesses, earning huge returns on tangible assets, can’t for any extended period reinvest a large portion of their earnings internally at high rates of return. — Warren Buffett, 2007 Download the Slides Deck: The_Capital_Cap Listen to the deep-dive discussion – The Price of Free Growth Visa earns a return on invested…
Why Heavy-Toll Compounders Are Rare
Capital intensity by itself, it’s part of the equation. — Chris Hohn Download the Slides Deck: Heavy Tolls Capital Absorbers Listen to the deep-dive discussion – The Dangerous Illusion of High ROE In 2025, Duke Energy reported a return on equity of roughly twelve percent. In the same year it spent fourteen billion…
The Three Components of Compounding: Return, Quantity, and Duration — and Why They Cannot All Be Maximized at Once
Compounding is arbitrage, not optimization. — The Infinite Investor Download the Slides Deck: Compounding_Components Listen to the deep-dive discussion – Why Compounding Is A Structural Arbitrage I. The Perfect Model Every business is a flow of capital between two reservoirs. The first is the toll — the cash the business collects in…
Capital Absorption and the Nature of Compounding – How Businesses Actually Compound
“What an organism feeds upon is negative entropy.” — Erwin Schrödinger, What is Life?, 1944 Download the Slides Deck: Capital_Absorption Listen to the deep-dive discussion – The Impossible Triangle of Compounding I. The Cult of the Compounder No word in investing carries more reverence than compounding. The compounder is the prize — the…
How Cash Flow Ratios Measure Value Creation or Destruction : Locating a Business on the Spectrum of Absorption
“A company’s anticipated value creation is measured by how much its return on invested capital exceeds its cost of capital, as well as how long it can maintain a positive spread.” — Michael Mauboussin Download the Slides Deck: The_Spectrum_of_Absorption Listen to the deep-dive discussion – Why most companies actually destroy value I. From Principle…
The Asymmetry Is Already There: Why a Freesurfer Below Its Floor Is Value, Growth, and a Free Call Option at Once
“It is insane to risk what you have and need in order to obtain what you don’t need.” — Warren Buffett, Berkshire Hathaway shareholder letter, 2017 “You are only harmed if you repeatedly pay too much for the option.” — Nassim Nicholas Taleb, Antifragile Download the Slide Deck (PDF) : Structural_Asymmetry Listen to the…
The Two Deans Agree : Growth Must Pay for Itself, and Be Captured by a Moat
“Growth is not free, and it has to be paid for with reinvestment.” — Aswath Damodaran “Growth within the franchise creates value.” — Bruce Greenwald Download the Slide Deck (PDF) : Moats_and_Arithmetic Listen to the deep-dive discussion – Why growth often destroys company value I. Two Deans, One Verdict Two men hold the title…
The Direction of Absorption – The Most Fundamental Property of a Business
“Most businesses consume cash. Very few ever create it for the security holder on a regular basis.” — Martin J. Whitman, founder of Third Avenue Management Download the Slide Deck (PDF) : Direction_of_Absorption Listen to the deep-dive discussion – The Direction of Capital Absorption I. The Flow Between Two Reservoirs Every business is…
When Growth Destroys Value – What the Dean of Valuation Sees in the SpaceX IPO
“Growth, when it’s accompanied by huge amounts of reinvestment and substandard gross margins, might not just be neutral to value, but actually be value destructive.” — Aswath Damodaran, The Intangible Economy, June 2026 Download the Slide Deck (PDF) : The_Physics_of_Value Listen to the deep-dive discussion – Why SpaceX Growth Might Destroy Value I. The Heresy…