“Price is what you pay. Value is what you get.” — Warren Buffett Listen to the deep-dive discussion – The Gap the Gift and the Guarantee Download the Slide Deck (PDF): The_Financial_Architecture I. The Floor The traditional approach to valuation projects growth—estimates future cash flows, discounts them at a rate that blends the risk-free…
Category: Capital Allocation
Why Berkshire Is Right About Google – The Alphabet Reinvestment Thesis
“I feel like a horse’s ass for not identifying Google. We screwed up.” — Charlie Munger Listen to the deep-dive discussion – Why Berkshire Hathaway Bet on Alphabet AI Download the Slide Deck (PDF) The_Alphabet_Architecture I. The Decision Worth Defending When Berkshire Hathaway committed $10 billion to Alphabet at roughly $350 per share,…
$190 Billion to Grow – What the AI Race Reveals About the Cost of the B
“For the investor, a too-high purchase price for the stock of an excellent company can undo the effects of a subsequent decade of favorable business developments.” — Warren Buffett Listen to the deep-dive discussion – Why Alphabet dilutes shareholders for AI Download the Slide Deck (PDF) : The_Growth_Ledger_Averagingup I. The Headline On June 1st,…
Visa vs Mastercard – Why the Market Pays a Premium for the Smaller Twin
“Charlie and I always knew we would become very wealthy. We were just not in a hurry.” — Warren Buffett Listen to the deep-dive discussion – Why Visa is cheaper than Mastercard Download the Slide Deck (PDF) The_Payment_Twins I. The Rarest Architecture on Earth Every business has two forces operating inside it. The A…
Three Layers, Zero Cost – The Geometry of Compounding
“Give me a lever long enough and a fulcrum on which to place it, and I shall move the world.” — Archimedes, 3rd century BC Listen to the deep-dive discussion – How Freesurfers Multiply Profits For Free Download the Slide Deck (PDF): Geometric_Compounding_AveragingUp I. What Hohn Sees In a rare interview, Chris Hohn—TCI…
The Architecture Beneath the Margin – Not All High Margins Are Created Equal
“Your margin is my opportunity.” — Jeff Bezos Listen to the deep-dive discussion – Why Jeff Bezos is only half right Download the Slide Deck (PDF) Beneath_the_Margin I. The Same Number, Two Different Realities Two businesses. Both report 60% operating margins. Both have maintained those margins for a decade. Both trade at premium multiples….
Cheap Money Hides Impurity – Why Rising Yields Reveal the Gradient
“Only when the tide goes out do you discover who’s been swimming naked.” — Warren Buffett Listen to the deep-dive discussion – Cheap Money Hides Impurity (20:11 min) Download the Slide Deck (PDF) The_Yield_Gradient I. The Tide Goes Out The 30-year U.S. Treasury yield has reached 5.19%—its highest level in nearly two decades. The last…
The Imperfect B – Why the Best Investments Live Between the Extremes
Listen to the deep-dive discussion – Natural Versus Mechanical Corporate Growth (17:16 min) Download the Slide Deck (PDF):The_Imperfect_B “There is a crack in everything. That’s how the light gets in.” — Leonard Cohen I. The Spectrum Without a Name The framework has defined two extremes. On one end, the Freesurfer. Growth costs nothing. The…
The Purification Trade – When a Freesurfer Sheds Its Mechanical B
“Perfection is achieved not when there is nothing more to add, but when there is nothing left to take away.” — Antoine de Saint-Exupéry “Addition by subtraction.” — Adage Listen to the deep-dive discussion – S&P Global sheds its mechanical business (19:43 min) Download the Slide Deck (PDF) : The_Purification_Trade_SPGI I. The Filing…
Building the Ark vs. Climbing the Mountain – Why Captured Growth Is the Only Growth That Matters
“If you are not in a franchise business protected from competition by barriers to entry, growth has no value, because any value that’s there is going to get competed away.” “These are rare.” — Bruce Greenwald Listen to the deep-dive discussion – Why Moats Matter More Than Waves (24:21 min) Download the Slide…