“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…
Category: Capital Allocation
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…
Why Visa Earns 30% But You Get 12% – The Recycling Spread and the Deep Mechanics of Compounding
« 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 “Over the long term, it’s hard for a stock to earn a much better return than the business which underlies it earns. If…
Heavy Tolls and Light Tolls – When the Cost of Growth Becomes a Moat
“A fat wallet is the enemy of superior investment results.” — Warren Buffett Download the Slide Deck (PDF) : Heavy vs Light_Tolls Listen to the deep-dive discussion – Why giant wallets need heavy moats I. The Framework in Brief A short orientation for the reader new to this collection. Every business contains two forces….
Toll Position – The Architecture of the Permanent Wave
“All of humanity’s problems stem from man’s inability to sit quietly in a room alone.” — Blaise Pascal “The big money is not in the buying or the selling, but in the waiting.” — Charlie Munger Download the Slide Deck (PDF) : Toll_Architectures Listen to the deep-dive discussion – The Invisible Tolls Of Global Capitalism…
The Toll Collects – What the SpaceX IPO Reveals About S&P Global and MSCI
“You paid for a front row seat. Don’t miss the show.” — Nobody (Terence Hill), My Name is Nobody (1973) “Nobody pays attention to the guy who collects the tickets at the gate.” — attributed to Nobody Download the Slide Deck (PDF): Owning_the_Index Listen to the deep-dive discussion – Index Giants Own the SpaceX IPO…
The Double Swell – How S&P Global Graduated to the Rarest Architecture in Investing
“I don’t think there’s ever been a swell that big. There were no sets. It was just line after line after line, as far as the eye could see.” — Laird Hamilton Download the Slide Deck (PDF) : The_Double_Swell_SPGI Deep-dive discussion – The Double Swell : How S&P Global Graduated to the Rarest Architecture in…