Quality Compounders

A long term, high conviction portfolio of systemically important businesses | Not financial advice |

Invest alongside me @joinautopilot

[Quality Compounders @Qual_Comp]

Chegg had 7.8 million subscribers and 15 years of accumulated data. What it did not have was a reason for customers to stay once something better existed for free. That is a question worth asking about every business before holding it long term.

[Quality Compounders @Qual_Comp]

Chegg’s $CHGG stock is down ~99% in five years. Most people blame AI. The more useful question for investors is why AI could displace it at all.

Some businesses can be routed around by a better algorithm. Others cannot. Knowing the difference is key for long term investing.

[Quality Compounders @Qual_Comp]

Consider a routability test, for example. Can a better, cheaper or free digital alternative replicate what the business does for its customers?

If the answer is yes, the business is exposed. If customers would stay regardless, you have found something worth studying.

[Quality Compounders @Qual_Comp]

@RobinhoodApp A natural language interface where you set trading rules in plain English and an agent executes them continuously. ‘Always-on’ agents are persistent inference demand.

[Quality Compounders @Qual_Comp]

@KobeissiLetter 45% of S&P 500 market cap in a single theme is historically without precedent. The businesses inside that number are not uniform, i.e. some have compounding cash flows, others are priced on expectations that years of execution still needs to deliver.

[Quality Compounders @Qual_Comp]

Robert Karr continues to invest his own capital privately. He has never published a public letter, given a media interview, or appeared on a panel.

His record was built entirely in private, verified only through SEC filings and the accounts of those who invested with him.

[Quality Compounders @Qual_Comp]

In 1996, Joho Capital was launched with a simple mandate: own a small number of exceptional businesses for a very long time.

Over 18 years, it compounded at ~20% annually.

Its founder, Robert Karr, has given no interviews and holds no public profile. See more...

[Quality Compounders @Qual_Comp]

The closure letter was described by those who read it as unusually thoughtful and honest. He said he had built something he was proud of and had decided it was time to pursue other things. It is one of the more dignified exits in the history of the industry.

[Quality Compounders @Qual_Comp]

@jojo_capital Their 2022 annual letter must’ve been an interesting read

[Quality Compounders @Qual_Comp]

Paul Cabot died on September 1, 1994, aged 95. The mutual fund structure he helped pioneer in 1924 underpins a $20 trillion industry today. He ran State Street Investment Corporation for 34 years. His principle throughout was simple: know what you own, interview the management yourself, and never let the structure of an investment enrich anyone except the investor.

[Quality Compounders @Qual_Comp]

In 1924, a 25 year old who had nearly been expelled from Harvard founded one of the first mutual funds in American history.

His name was Paul Cabot, and almost nobody outside the world of finance knows who he is.

[Quality Compounders @Qual_Comp]

He timed it almost perfectly. The bull market of the 1950s rewarded the shift. By the time he retired as Harvard Treasurer in 1965, the endowment had grown from $177 million to over $1 billion, the largest university endowment in the United States at the time.