Okay, so I know they don't use the margin of safety concept, opting for a hurdle rate. But what Leonard says here is similar to how James Mai defines the margin of safety.
I don't think both concepts are incompatible. I think they create 4 scenarios and give them odds to figure out if something meets the hurdle, so they have to be probabilistic about it and that's a built in margin of safety.
Okay, so I know they don't use the margin of safety concept, opting for a hurdle rate. But what Leonard says here is similar to how James Mai defines the margin of safety.
I don't think both concepts are incompatible. I think they create 4 scenarios and give them odds to figure out if something meets the hurdle, so they have to be probabilistic about it and that's a built in margin of safety.
Great post. Love the quotes from Mark L!
Thank you for reading! 💚 🥃