Monthly Commentary

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When the going get tough, the tough go shopping

Markets have declined over the past three months. As we know, volatility creates opportunities for long-term investors. Economic turning points like the one we are currently experiencing come with volatility as markets and investors have to adapt to the reality of growth, inflation and rising interest rates. Now is the time to take advantage and buy great companies at marked down prices. Read more »

Miracle in Carlton Gardens

“In these dark days, we tend to look for little shafts of light that spill from heaven” is the beginning of one of the great comic letters of all time. We do not want to be mean and selfish about what little brightness is shed upon us from time to time. So we propose to share with you a tiny flash that has illuminated our sombre lives. On a recent dark December night in Carlton Gardens, we hailed a London taxi that turned out to be one of only two Berkshire Hathaway branded taxis among the 20,000 licensed here in London. It turned out that Berkshire Hathaway Home Services had bought its first real estate brokerage in the United Kingdom and fitted out two taxis in celebration. As you can see, the taxi driver was as cheered as we were by the occasion and we have his number in case you are looking for a taxi in London. Read more »

Your Margin is My Opportunity

We have been saying for some time now that we expected markets to become more turbulent and volatile as we are in the midst of a turning point for the US and European economies. On top of that, we also face significant upheaval from the US political environment remaining fluid, the ongoing Brexit negotiations in the UK, and the uncertain geopolitical situation more broadly. Well here we are. Markets oscillate between warnings about rampant interest rate rises and the fears of impending global recession. Stocks, including many in our portfolios, have corrected as investors look to lock in profits by selling what has worked. Given the worries, any company that does not produce results is penalized harshly as if a slight beat or miss of quarterly growth or margins should indicate a flawed investment thesis and a permanent impairment of value. Read more »

Turbulent Times

In the middle of October’s turbulent financial markets, on a day when Amazon reported revenue growth of 29% with its cloud computing business AWS growing 46% and its advertising business more than doubling, which we have been advocating as another driver for Amazon’s growth and especially its profitability, yet it is trading off 8% or more on the day because markets were expecting the company’s guidance to be slightly higher than it was. Read more »

One Way or Another

We were speaking at Latticework, an investment conference in London earlier this month, where one of the other speakers, one of Europe’s most prominent value investors, said that he does not believe in projecting what companies do more than two years out because nobody can know what will happen. Read more »

Summer Reading

One of the books we have been reading this summer is Titan, Ron Chernow’s biography of John D. Rockefeller, an extraordinary perspective on one of the most important figures in US economic and social history. Rockefeller rose from a troubled family background to create Standard Oil, one the largest corporations the world has ever seen, consolidate and control the US oil industry and amass what may still be the greatest single fortune ever made. His legacy lives on in the oil companies he created, including Chevron, ExxonMobil and Amoco (now part of BP), which even after the forced breakup of Standard Oil in 1911, remain among the biggest in the world. He also shaped US philanthropy by creating Rockefeller University in 1901 and the Rockefeller Foundation in 1913, to which he donated much of his fortune and which provided the framework along which most subsequent foundations were built. Read more »

“You Have to Kill the Chicken to Scare the Monkey”

The global turmoil we have experienced for the first half of this year reminds us of this famous Chinese proverb. Like many proverbs it is hard to translate but it means something like a measure of fear is necessary at times in order to bring bigger things in line. To us it more aptly describes the confusion which has grown immeasurably across the political landscape. The events of the first half of the year have served to remind us once again that, as long-term investors, the best we can do is to focus on the fundamentals. Read more »

The Return of Classic Coke: Are Big Brands A Decade Late to the Party

A trip to the local Waitrose supermarket last week revealed something many of you will have noticed as well. Classic Coke is back for the first time since the ill-fated and short-lived rebrand to New Coke in the early 1980s. This time around, in the new age of health conscious consumers and with pressure growing to address obesity - one of the major public health issues of our time - Coca-Cola has decided to change its Coke Zero brand to look and feel like the full fat version, with Classic Coke the option for those with (very) sweet tooths. Make no mistake, this is a pivotal moment for the business. Coming as it does 36 years after the introduction of Diet Coke, this rebrand is an acknowledgment that the business has reached a tipping point. But is it far too late? Read more »