Kerrisdale vs. Long-Only Views
high confidence — compiled with source citation from the investment brain.
Kerrisdale vs. Long-Only Views
Kerrisdale vs. Long-Only Views
Kerrisdale Capital and the long-only compounders in this corpus — Fundsmith and Semper Augustus — are not so much opponents as occupants of different time signatures. Kerrisdale writes theses with a thesis expiry: a specific mispricing to be corrected. The long-only managers write theses with no expiry at all. See intrinsic-value, margin-of-safety, and mr-market.
The short side: a named mispricing and an expected reversion
Kerrisdale's short reports are built around a relationship that has come unglued, not around a company that is worthless in an absolute sense. On MicroStrategy the framing is a pair trade: "We are long bitcoin and short shares of MicroStrategy, a proxy for bitcoin which trades at an unjustifiable premium to the digital asset that drives its value." And the punchline is explicitly relative, not fundamental: "Our thesis is not predicated on a bearish view of bitcoin or MicroStrategy, but rather a belief that the relationship between the two has grown distorted."
Where the company is genuinely impaired, the thesis hardens into a terminal call. On Carvana the report concludes: "We view the equity as a zero and investing at current levels is a worse deal than buying a clunker from a slick used car salesman." Either way, the mechanic is the same: identify a price that is wrong, and wait for a mean reversion on a compressed timetable — a discipline closer to relative-valuation-multiples arbitrage than to ownership.
The long side: buy-and-hold as the absence of a trade
Fundsmith's Terry Smith names the posture by what it refuses to do. The third leg of the strategy he calls simply "Do nothing": "minimising portfolio turnover remains one of our objectives", achieved with turnover of 11.1% in the period and just 0.008% of fund value spent on voluntary dealing — the explicit claim being that the non-action is the edge. There is no thesis expiry here; the value accrues through the businesses compounding, not through a price correcting.
Semper Augustus phrases the same temperament as a contrast against the index: its "Intrinsic Value Update" sets "an undervalued, actively-managed Semper portfolio" against "the capitalization-weighted S&P 500, concentrated in a shrinking number of highly-priced shares like never before." The manager's edge is patience across a secular cycle, not speed into a single mispricing.
The comparison
The divergence is in what each investor is paid to wait for. Kerrisdale is paid to wait for a premium to contract or a fraud to collapse — a bounded, usually shorter horizon with an explicit catalyst — and carries the cost of that wait (borrow, mark-to-market, the risk of a squeeze it itself warns about). The long-only managers are paid to wait for earnings to compound, a horizon that is deliberately unbounded, and their risk is the opposite: owning a business whose quality decays slowly enough to go unnoticed. Both are value disciplines, but one prices convergence and the other prices accumulation — the same fork, at a different time scale, as quality-vs-statistical-cheap.
See also
Sources
investor-letters/Kerrisdale/Letters-Markdown/2024-03 - MicroStrategy (MSTR).mdinvestor-letters/Kerrisdale/Letters-Markdown/2023-06 - Carvana Co. (CVNA).mdinvestor-letters/Fundsmith/Letters-Markdown/2023 - Annual Letter to Shareholders.mdinvestor-letters/SemperAugustus/Letters-Markdown/2024 - Client Letter.md