Robustness Ratio Revisited

In this episode of The Capital Cycle Podcast, Edward Chancellor interviews Alice Li, a research analyst at Marathon Asset Management, about the relationship between a company's value proposition to its customers and its investment potential. They discuss the "robustness ratio," which measures a company's moat by analyzing its distribution of profit to customers and employees versus shareholders. Alice provides examples of companies with good robustness ratios like Netflix and Interactive Brokers, and companies that under-deliver value, such as Hargreaves Lansdowne and certain luxury brands. The discussion also covers the importance of considering all stakeholders and the risk of overpaying for even great companies, citing Walmart as an example, and concludes with why Netflix is not a Marathon holding due to valuation concerns.