MOI interview with Cook & Bynum

[Evolveus]

These fellows are pretty young, but its a good interview (as usual with MOI).  They seem to be pretty focused on process, and there were more than a handful of Munger-esque responses from the two of them.  I also like their extreme concentration (for a mutual fund), and a their value orient.

 

http://moneyinstereo.blogspot.com/2012/10/cook-bynum-another-young-fund-doing-all.html

 

they seemed like the opposite of these guys from earlier

 

http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/look-out-klarman!-watch-your-back-dalio!/

[Guest rimm_never_sleeps]

Very surprised at the way they invest a small fund and that their performance isn't better since they started at almost the very bottom of the market in mid 09. these guys are both way smarter than me way more credentialed (my name is rimm_never_sleeps, after all). but I will predict that this portfolio as currently structured, combined with the anchor of their cash balance, and 1.88% expense ratio, is basically a quasi snp 100 index fund in terms of return potential. again no offense to them intended. I want to see smaller fund managers take advantage of their "anti" scale. Note, I could be very wrong about their future returns. :)

[matjone]

Thanks for posting this.  Would be interesting to hear them go through their reasoning on some more of their past and present holdings.

 

I wonder how much coke consumption will grow in the long run, given the obesity problem and the amount of focus there is now on living healthier.  There seems to be a big push to educate kids about looking after their health, way beyond what they did in health class when I was growing up.  That being said, on the rare instances I do feel like a coke I'd probably pay triple whatever they're charging for pepsi.

 

I'm actually kind of skeptical whether the power of brands in general will be what it was in the last half century or so.  I am sure some will do well, but going forward  I wonder about  the business of just stuffing some corn and soy into a shiny package and advertising the hell out of it.  When I go to Aldi there are hardly any major brands and no one seems to care, and  I wonder how much wal mart's traffic would go down if they did the same.

[maxthetrade]

When I go to Aldi there are hardly any major brands and no one seems to care, and  I wonder how much wal mart's traffic would go down if they did the same.

 

Well, Aldi just recently decided to sell Coca Cola and Beiersdorf products in Germany:

http://www.thelocal.de/national/20120929-45263.html

 

 

 

[matjone]

Yeah, if I remember right I once saw an article where an Aldi's manager had said they had found that they did better selling colgate toothpaste than with a cheaper variety.  I imagine its the same way with coke and a few other brands that people really like.  But my understanding is that their strategy is to sell their private label brand on most product categories.

[Evolveus]

Thanks for posting this.  Would be interesting to hear them go through their reasoning on some more of their past and present holdings.

 

I wonder how much coke consumption will grow in the long run, given the obesity problem and the amount of focus there is now on living healthier.  There seems to be a big push to educate kids about looking after their health, way beyond what they did in health class when I was growing up.  That being said, on the rare instances I do feel like a coke I'd probably pay triple whatever they're charging for pepsi.

 

I'm actually kind of skeptical whether the power of brands in general will be what it was in the last half century or so.  I am sure some will do well, but going forward  I wonder about  the business of just stuffing some corn and soy into a shiny package and advertising the hell out of it.  When I go to Aldi there are hardly any major brands and no one seems to care, and  I wonder how much wal mart's traffic would go down if they did the same.

 

 

In regards to coke consumption, I definitely hear you on the obesity issue.  A 2010 study by the CDC showed that 35% of American adults are obese and 17% of children.  Its a daunting problem with no immediate solution, and it impacts society on numerous levels.  Even though that is clearly the case, I don't foresee is a big decrease in coke consumption.  It's like Munger's example of the frog that stays in the pot until its death when the temperature slowly increased until it was boiling and too late.  It's such a slow acting agent and second order negative effects aren't noticeable for years, so I can't see what impetus people would have to immediately curtail coke consumption.

 

I remember taking a pass many years ago on the Philip Morris spin off & Altria when considering how smoking was on the decline in the US because of the gravitation towards healthier living.  Boy was I wrong - those co's still print money.  But that being said, I'm not personally aware of the capex involved in Coke distribution, as I'd prefer the pure play syrup maker.  More color on their positions would be an interesting read.  I'm not plugging these guys - I just found the interview interesting and they have some pretty cool articles on their website. I realize the record is much to short to judge, and as Rimm_never_sleeps said, starting a fund at the bottom, you would expect higher results maybe similar to Oceanstone.

[Rabbitisrich]

Yeah, if I remember right I once saw an article where an Aldi's manager had said they had found that they did better selling colgate toothpaste than with a cheaper variety.  I imagine its the same way with coke and a few other brands that people really like.  But my understanding is that their strategy is to sell their private label brand on most product categories.

 

I can't believe how little share the private labels have taken away from branded soda after all these years. There isn't much difference between colas, as far as my tastebuds can tell. It's amazing that a grocery store can place private labels next to Coke at a 25% discount, and STILL underperform.

[matjone]

 

I remember taking a pass many years ago on the Philip Morris spin off & Altria when considering how smoking was on the decline in the US because of the gravitation towards healthier living.  Boy was I wrong - those co's still print money.

 

Haven't unit sales on cigarettes been going down since all this negative attention started, especially for younger people?  I thought this was the case.  Not that it put them in the red or even came close to doing so.

 

If coke consumption does go down I imagine it will take a long time.  But if kids are sitting there getting it pounded into their heads how bad it is it could have an effect down the road.  Who knows,  maybe they'll keep drinking it to be rebels.  Even if it does slowly decline I imagine coke can keep raising prices for quite a while to counteract it.

 

As far as other companies taking market share from coke, I'd bet quite a bit that that won't happen.  I know they won't win me over.  I think coke tastes better, plus it makes me handsome and healthy and increases my chances with the ladies.