Monday, October 8, 2012

Cook & Bynum: A young fund doing all the right things

Embedded below is a recent interview by The Manual of Ideas with Richard Cook and Dowe Bynum of the Cook & Bynum Fund (COBYX).  The young managers both have prestigious prior experience working at Goldman Sachs and Tudor Investment Corp, respectively.  After reading the interview, I would not let age belie the duo's investment insight and process.  There are several traits exhibited in the interview that piqued my interest. Listed are some of the guiding tenants of the Cook & Bynum fund:

1. Astute subscribers to Munger's theory of Metal Models and building a mental latticework on which to hang one's ideas.
2. Buffett & Munger's belief in portfolio concentration - concentrating one's assets in one's best ideas.
3. Buffett & Munger's adherence to only working with the highest quality management with properly aligned incentives.   
4. Prefer to buy a great business at a fair price rather than a fair business at a great price.
5. Eating their own cooking.  The majority of their net worth is personally invested in the fund.
6. Ben Graham's landmark principle of investing with a Margin of Safety.

The interview below goes into more detail about their background, philosophy, and process.   I was a bit disappointed to see a 1.88% expense ratio, but hopefully that will go down as assets under management grow.  If Cook & Bynum stick to their guns as outlined in the interview, I would expected a very enviable long term track record. 

Manual of Ideas Interview With Cook Bynum With Disclaimers

Disclosure: this is not a recommendation to buy or sell any securities mentioned in this article or anywhere on this website. 

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