How long would it take to copy your local coffee shop?
A fortnight? An espresso machine, some distressed furniture and a barista who can explain the moral superiority of oat milk.
Now try copying Burberry.
The factories, products and distribution network might take £1 billion and seven years to replicate. Its heritage could take 30 years, £30 billion in marketing and the strategic marriage of one’s daughter into a celebrity dynasty.
Tricky.
At Kernow, we look at businesses and ask a simple question: how would we copy them?
The market is full of rabbit holes. Most contain rabbits.
Some companies take weeks to replicate. Others would take a lifetime. Occasionally, we cannot even work out what the business does. Those are often the ones we bet against.
Of course, being hard to copy is not the same as being worth owning. Competitive advantages erode. Wonderful financial ratios can conceal fragile businesses. The market is full of rabbit holes. Most contain rabbits.
Yet the question reveals something important. We call the distance between the cost of replicating a business and what the stock market asks us to pay the Copy Gap. That is our treasure map.
Britain is rather good at producing businesses that are difficult to copy. Engineering expertise, trusted brands, distribution networks, peculiar industrial niches and people who know things that cannot be taught in business school.
It is considerably less good at celebrating them.
We hunt for good businesses hiding behind bad stories. Since 2019, Kernow has specialised exclusively in British equities. Britain has taken centuries to build. We suspect the stock market occasionally forgets what that is worth.
We believe Britain’s best days are listed.
Issued by Kernow Asset Management Limited, authorised and regulated by the Financial Conduct Authority. Capital at risk. The value of investments can fall as well as rise, and you may get back less than you invest. Past performance is not a reliable indicator of future results. This is not investment advice or a recommendation to buy or sell any investment. References to specific companies are for illustration only. For Professional investors only.
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