The average annual amount of capitalized expenditures that the business requires to fully maintain its long-term competitive position and its unit volume… must be a guess — and one sometimes very difficult to make. — Warren Buffett, Berkshire Hathaway shareholder letter, 1986 Download the Slides Deck: Capital_Longevity_and_Reinvestment Listen to the deep-dive discussion – Why…
Tag: Growth Stocks
Growth stocks compound their returns at a high rate
How Much of the Spending Actually Compounds : We Went Looking for Hidden Capital. We Found Something Else.
Thus our first lesson: businesses logically are worth far more than net tangible assets when they can be expected to produce earnings on such assets considerably in excess of market rates of return. The capitalized value of this excess return is economic Goodwill. — Warren Buffett, Berkshire Hathaway shareholder letter, 1983 Download the Slides…
Why Every Compounder Reaches a Crossroads – What Success Does to a Business
If something cannot go on forever, it will stop. — Herbert Stein, former Chairman, U.S. Council of Economic Advisers Download the Slides Deck: The_Compounder_Crossroads Listen to the deep-dive discussion – The internal physics of business compounding I. The Same Label on Different Businesses Coca-Cola and PepsiCo sell drinks to the same world, ride…
The Stock You Can Sleep On: The Toll Whose Growth Is Free — and Asks No Decision
“I have to be able to sleep at night. It has to be sufficiently obvious… because what kills you as an investor is permanent loss of capital.” — Sir Chris Hohn, TCI Fund Management Download the Slides Deck: THE_FREESURFER Listen to the deep-dive discussion –How Freesurfer stocks capture free growth I. The Investor…
The Tollkeeper That Outlives Its Payers – MSCI and the Migration of a Toll
The industry needs us more. — Henry Fernandez, November 2025 Download the Slides Deck: MSCI_Toll_Structural_Cartography Listen to the deep-dive discussion – How MSCI outlives its dying customers I. The Paradox Late last year, the chief executive of MSCI sat for an interview and described his own business with unusual candor. Three quarters of the…
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…
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…
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…