Capital Allocation Strategies and Investment Insights in Successful Companies

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The chapter explores the capital allocation strategies of O'Reilly Auto Parts and NVR, highlighting their long-term focus and employee tenure similarities. It discusses NVR's distinctive business model among home builders and its consistent returns on invested capital. Additionally, insights on concentrated portfolios, investment entry strategies, and a flexible approach to market cap preferences are shared, emphasizing continuous learning and seizing opportunities in challenging market conditions.

Kyle Grieve chats with Jeremy Kokemor about why Jeremy has utilized Buffett’s 0/6/25 model and why he thinks it’s so powerful, why value, growth and quality are all important for successful investing, why price isn’t the only way to get a margin of safety, why investors should look at reinvestment rates to help identify wonderful investments, why you should only invest in countries that have shareholder friendly regulations, how many investments per year concentrated investors need to be successful, and a whole lot more!

IN THIS EPISODE, YOU’LL LEARN

00:00 - Intro

03:09 - Why the 0/6/25 model is so powerful and how it aligns Jeremy with his partners.

03:09 - Other methods that Jeremy has used to create alignment with his partners.

15:09 - How a high-quality, low-debt business can add to their margin of safety outside of price.

17:32 - Why Jeremy views the combination of value, growth, and quality as being important for his investing process.

19:17 - The similarities and differences between O'Reilly Auto Parts and NVR in terms of capital allocation.

24:14 - How Jeremy keeps costs down to help ensure his business model is optimized.

28:33 - Why Jeremy runs a concentrated portfolio.

34:27 - The importance of reinvestment into wonderful businesses and value creation.

40:08 - Why we should evaluate a business based on its ability to grow without reinvestment.

40:08 - The strengths of using multiple evaluation methods to help you understand the value of a business.

And much, much more!

*Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences.

BOOKS AND RESOURCES

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Read Jeremy’s shareholder letters here.
Check out the books mentioned in the podcast here.

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