What Would DLS Do?

When I look around, I think, well, where are the Walmart billionaires aside from the families? Walmart has been publicly traded since the early 1970s. The public had and has access to some of the most exceptional businesses ever created. And yet, where are the people who benefited? This is why Marlowe exists—to capture the wealth creation that the investment industry systematically fails to capture, despite having access to the same great businesses as founders and early investors.

We are authentically investing for the long term in modestly valued companies run by management teams who at times will be making decisions, the fruits of which may not be reflected in the stock price for years. As a result, the near-term results are likely to be as bad as they may be very good. But we are confident, not so much in the prediction of good or bad, but that in the long run they will prove satisfactory.

My preference is for results to be measured over a five-year time frame. However, whenever there is an opportunity to learn we will learn. We may be disappointed with a stock price in the short term, but you can't learn from that. However, if management makes an unforced error in a capital allocation decision or we realize we have fundamentally misunderstood an aspect of the business model, this is worth much more than a stock price going up or down.

Good ideas are rare. When you find one, bet heavily. That has always been common sense for Marlowe. Find a simple idea and take it seriously—and take it to its natural limit. That's what we are doing now. If you're not working on your best idea, you're doing it wrong.

Fear sells faster than logic. You can see this daily: stock prices rise incrementally, but fall suddenly. The odd thing is that if shares double three times in about seven years (800%), it seems terrific, but the company in question never rose more than 20% in a single week. Meanwhile, over the last 8 years it declined over 20% in a week about 18 times.