February 19, 2022
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Summary: The prospect of long – sometimes ignored – runways of capital deployments at excess returns makes serial acquirers exciting.
Excess profits exist only in some kind of monopoly. And monopolies are reliably available – at a discount – only with an every little helps strategy.
Successful serial acquirers focus on incremental improvements, aggressive capital reallocation, decentralization, and lean overheads.
As perpetual owners, serial acquirers need to buy good businesses, which by definition are asset-light.
Asset-light businesses are also less exposed to inflation. Investors in asset-heavy firms run a higher risk of confusing return of capital for return on capital.
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Disclaimer: This is not investment advice. Information is provided 'as is' and solely for informational purposes, not for trading purposes or advice. Any reference to or omission of any reference to any company should not be construed as a recommendation to buy, sell or take any other action with respect to any security of any such company. The author may hold positions in securities discussed. Any forward looking-statement is subject to risks and uncertainties. Read further disclosure in the Terms of Service.