What I Own and Why

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It is commonly stated in the value investing community that you should be able to clearly explain why you own an investment in a few sentences or you probably shouldn't own it. Here I break down my investments along with a brief explanation of why I own each of them. I am currently in a bit of a defensive stance, hence the large allocation to Treasury bills, as I have had difficulty finding investments that make sense at current prices.

The S&P 500 is a low cost way to own 500 of the largest and most dominant public U.S. companies. In order to be added to the S&P 500 a company must have positive reported earnings in its most recent quarter, and the sum of its earnings over the previous four quarters must also be positive. This filters out companies that have yet to achieve profitability which is likely to produce a slightly higher quality group overall compared to a total market fund [1].

Treasury bills are short term loans to the U.S. federal government of 4-52 weeks duration, and since the government has the ability to tax its citizens and print money on demand, there is near zero risk of losing your money [2]. Treasury bills are currently paying annualized interest of around 3.7% and are not taxable at the state level. They are marketable and mostly insulated from interest rate risk due to their short maturity, so you can quickly turn them to cash when opportunities arise. Treasury bills are comparatively attractive at the moment with the S&P 500 trading at a sporty P/E ratio of around 27, which when inverted also implies a 3.7% return based on current earnings [3].

Warren Buffett is the foremost authority on what makes an exceptional business, and Berkshire Hathaway is the business he created. Through the massive insurance operation at its core it generates float, which is money received from insurance premiums that will eventually have to be paid out in claims. Due to the company's large net worth in relation to float it is not limited to investing primarily in low-interest fixed income securities like a typical insurance company, and instead uses the money to purchase quality businesses likely to generate higher returns, both in the form of wholly owned subsidiaries and stock of publicly traded companies. Most years the float is better than free, meaning Berkshire is being paid to borrow the money, providing a near-ideal version of leverage. Official P/E numbers for Berkshire are volatile and misleading due to the inclusion of unrealized capital gains in GAAP earnings, but approximating "look-through earnings" as Buffett has suggested yields a P/E of 21 compared to 27 for the S&P 500.

Crocs is a foam footwear company that is attractive on a price-to-earnings basis. The company reported a net loss for 2025 due to large goodwill and asset impairments from overpaying for its acquisition of fellow casual footwear company HEYDUDE in 2022, but removing the impairments yields a low P/E of 8 [4]. The company carries a lot of debt from financing the acquisition, but has been using its strong cash flow to steadily pay it down in conjunction with aggressive share repurchases. Andrew Rees has been CEO since 2017 and has the majority of his net worth in CROX so his interests are well aligned with shareholders. With HEYDUDE sales declining, Crocs sales leveling off, and the unpredictability of fashion trends there is high uncertainty in future business results, but as currently priced, and with 10% YoY revenue growth outside of the U.S., there is significant upside with limited downside—as Mohnish Pabrai would say, "heads I win, tails I don't lose much".

Lululemon is the world's leading high-end athleisure apparel brand, has zero net-debt, a modest P/E ratio of 12, a longstanding price-sensitive share repurchase program, and has been using over 100% of free cash flow the last two years to aggressively buy back shares. The share price has dropped 70% from its peak in late 2023 due to stagnant revenue growth in the Americas, increased competition from new disrupters Alo and Vuori, tariff headwinds, and ongoing leadership battles with a vacancy at the CEO position and board shakeup pressure. Despite the recent challenges Lululemon remains a premier brand with quality products, significantly higher margins than competitors, and a strong balance sheet. The fickle nature of fashion trends and leadership battles adds some uncertainty, but with Lululemon still in position as one of the top brands for both Gen Z and Millennials, and 22% YoY revenue growth outside of the Americas with the segment now making up 25% of total revenues, there's plenty of upside here.

Adobe is a software company with a diverse suite of market leading products deeply embedded in professional workflows, that is improving in every measurable way based on its financial statements, and is currently trading at a P/E of 13 which is less than half the P/E of the S&P 500. The stock has been beaten down recently due to fears that AI will destroy its business model but it's difficult to say what effect AI will ultimately have and its very possible it will serve as a tailwind as Adobe continues to integrate powerful AI features into its products. The business is protected by high switching costs as it takes a lot of time to learn new platforms and businesses are slow to make major changes to their software suites. Enviably high margins have been growing thus far rather than shrinking as feared, with a similar story for return on assets and equity, earnings and free cash flow are at all time highs and growing by double digits, there is no net debt, and management has been taking advantage of the dropping stock price the last two years by allocating greater than 100% of free cash flow toward share repurchases.

Last updated 4/12/2026

[1] As of this writing 94% of the companies in the S&P 500 are profitable compared to only around 60% for the Russell 2000 U.S. small-cap index

[2] Whether the return is sufficient to keep up with inflation and maintain buying power is another question but you know you will get your dollars back plus the promised return

[3] The S&P 500 return is understated when compared in this way because it is likely to grow over time as the earnings of its constituent companies grow whereas there is no reason to expect the treasury bill return to have sustained growth over the long term

[4] Price-to-Free-Cash-Flow (P/FCF) is unaffected by the impairments and tells a similar story with P/FCF of 8

This essay is being made available for educational purposes only and should not be used for any other purpose. The information contained herein does not constitute and should not be construed as legal, tax, investment, financial or other advice.