February 2026

Why "Durable Advantage" is a Trap for Lazy Minds or What I Learned from Henry Singleton at Teledyne

Every MBA, every VC partner, every aspiring founder has the same line memorized. Durable competitive advantage. The moat. They read Buffett once, maybe twice, watched a few YouTube breakdowns of See's Candies and now they walk around asking "but what's the moat?" like it's some kind of intellectual password that gets you into the smart people room.

Here's the thing. Durable competitive advantages do exist. Coca-Cola and LVMH have brand moats that have compounded for decades. Meta has network effects so deep that entire countries basically run on WhatsApp. Nvidia has a scientific lead that took thousands of PhDs and billions of dollars to build. TSMC coordinates the most complex manufacturing process in human history across a supply chain so intricate that no government or competitor has been able to replicate it despite spending hundreds of billions trying. These are real. I'm not disputing that.

But for every Coca-Cola there are 10,000 companies that don't have a durable advantage and either pretend they do or burn years obsessing over building one when it would be a whole lot more productive to find advantages that can generate excess returns for two, five, maybe ten years and ride those hard while constantly adapting to a changing field. That's where the actual money is made for the vast majority of businesses and investors. And the people who understand this are the ones who study what the greats actually did, not what they said in a 30-second CNBC clip.

The problem with memetic business thinking

The world is a complex place. Unimaginably complex. And the human mind has a narrow context window, so we compress concepts into words and categories to make sense of it. There are millions of distinguishable colors but we say blue, red, green. There are infinite gradations of temperature but we say hot and cold. This compression is necessary. Without it we couldn't think or communicate at all.

But with compression like this comes compression loss. And in business strategy, the compression loss is catastrophic. "Durable competitive advantage" compresses an enormous range of situations, timescales, market dynamics, and competitive contexts into three words. It takes something that in reality is deeply conditional and context-dependent and turns it into something that sounds universal and permanent. And then people build entire strategies around the compressed version without ever unpacking what was lost.

The incentives make this worse, not better. Book publishers need memetic titles and concepts that spread. "Find your moat" sells. "It depends on a hundred variables that change every quarter" does not. Business schools are teaching large classes of students with varying levels of interest and narrow context windows, so they need frameworks that can be absorbed in a 90-minute lecture and tested on an exam. Consultants need deliverables that look definitive, not probabilistic. At every level of the chain, complexity gets compressed further and the compression loss compounds until what you're left with is a bumper sticker that bears almost no resemblance to how the best operators actually think.

The charlatans thrive in this environment. Half the "thought leadership" in business is people who have never operated anything telling other people who have never operated anything how to operate things, using frameworks derived from case studies written by people who have also never operated anything. It's compressed, lossy thinking all the way down. And the moat framework, as useful as it is in specific contexts, has become the poster child for this kind of lazy pattern matching.

The best operator I've ever studied didn't think in frameworks. His name was Henry Singleton and he ran a company called Teledyne from 1960 to 1986 and what he did there is the single best case study in capital allocation and adaptive strategy that exists. Buffett himself said that if you took the top 100 business school graduates and made a composite of their triumphs, their record would not be as good as Singleton's, who was trained as a scientist, not an MBA. He called the failure of business schools to study Singleton a crime, saying they insist on holding up as models executives cut from a McKinsey cookie cutter. Munger said Singleton's management was the most brilliant he'd ever seen. And yet almost nobody talks about him because what he did doesn't fit neatly into any framework.

What Singleton actually did

Singleton didn't find one edge and ride it for 40 years. He found the edge that existed at each moment in time and played it as hard as he could.

In the 1960s, conglomerate stocks traded at absurd multiples. Teledyne was trading at 40 to 70 times earnings. Singleton saw this and used the stock as currency to acquire over 130 companies in less than a decade, buying businesses at around 12 times earnings with a stock trading at many multiples of that. The shares outstanding quadrupled from 1965 to 1970. He wasn't building some grand unified vision of synergistic verticals. He was buying good businesses cheap using an expensive stock. The edge was the stock price. So he played it.

Then the music stopped. The 1970s bear market hit. Teledyne's stock crashed from around $40 to below $8. The P/E collapsed below 10. Most conglomerate CEOs panicked. They tried to keep acquiring. They tried to stay the course. They wrote letters to shareholders about long-term vision.

Singleton did the opposite. He looked at the new hand he'd been dealt and realized the edge had flipped completely. His stock was now stupidly cheap. So he stopped acquiring and started buying it back. From 1972 to 1984, in eight separate tender offers, he repurchased over 90% of Teledyne's outstanding shares. The share count peaked at 88 million in 1971. After the first six tenders by 1976 it was down to under 12 million. Then he kept going with two more tenders in 1980 and 1984, the last one at $200 a share, about $30 above market price, and eight million more shares came in. In total he spent over $2.5 billion on buybacks, and he never sold a single personal share. In 1972 he tendered for one million shares and 8.9 million came in. Net income per share went from $1.64 in 1970 to $46.66 by 1985, a fortyfold increase. Shareholders who stayed from the first buyback in 1972 had achieved a gain of 3,000% by 1983.

Then in the late 1970s he saw insurance as an opportunity to generate float. He pivoted again, built up Teledyne's insurance operations, moved their portfolios from fixed income to equities when the stock market was depressed, and bought into major public companies at rock bottom prices.

Every single phase was a different strategy. Acquisitions with overvalued stock. Buybacks with undervalued stock. Insurance float deployed into cheap equities. Three completely different playbooks across three different decades, each one perfectly suited to the conditions at the time.

An investor who held Teledyne stock from 1966 achieved a 17.9% annual return over 25 years, a return of 53 times their capital. The S&P 500 returned about 6.7 times over the same period. Not because he found one durable advantage and sat on it. Because he never stopped adapting.

There's more to Buffett than snappy quotes on CNBC

The people who quote Buffett on moats would benefit from actually studying what Buffett did rather than what he says in interviews. Buffett has a public persona and it's a great one but his actual behaviour is a lot more nuanced and a lot more interesting and has produced some of the most incredible results in the history of capital markets.

In the 1950s and early 1960s Buffett ran a partnership out of Omaha that compounded at 29.5% annually for 13 years without a single losing year. He did it by running what he called "generals," "workouts," and "controls." Generals were undervalued stocks. Workouts were merger arbitrage and special situations, spinoffs and reorganizations that produced consistent short-term returns regardless of what the market did. Controls were activist positions where he took over companies and forced change. In the mid-1960s, he ran a $7 million short portfolio hedging against a market collapse, shorting Alcoa, Montgomery Ward, Travelers Insurance and Caterpillar Tractor. He bought oil stocks specifically to arbitrage acquisitions being made by larger integrated majors, targeting 20% annualized returns on those operations. At one point the partnership's largest single position, Sanborn Map Company, accounted for 35% of the entire portfolio in 1959. This is not diversification. This is a man concentrating capital where the edge was biggest.

This is not the "buy wonderful companies at fair prices and hold forever" Buffett that gets quoted on Instagram. This is a guy running an aggressive, multi-strategy operation that would look more like a modern hedge fund than the folksy image people have of him sipping Cherry Coke in Omaha.

Then he evolved. Partly because of Munger's influence, partly because his asset base grew too large for cigar butts and merger arb. He shifted to quality businesses at fair prices. Then to buying entire companies through Berkshire. Then he started using convertible preferred stock as a tool to extract incredible terms in exchange for the credibility of his name. In 1987 he bought $700 million of convertible preferred stock in Salomon Brothers, paying a 9% coupon and convertible at $38 a share when the stock was at $30. In September 2008, at the peak of the financial crisis, he put $5 billion into Goldman Sachs preferred stock with a 10% dividend and warrants to buy 43.5 million common shares at $115. Goldman was paying him $500 million a year just for the privilege of his name on the cap table. He made over $3 billion on that deal. In 2011 he did the same thing with Bank of America, another $5 billion in preferred stock with similar terms. These are not passive moat investments. These are structured deals that use his reputation as a financial instrument.

Then look at Japan. Starting in July 2019, Buffett began quietly accumulating stakes in five Japanese trading houses: Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo. He financed the purchases by issuing approximately 1.3 trillion yen in yen-denominated bonds at rates below 1%, sometimes as low as 0.5%. He was buying companies yielding 14% on earnings, financed at 0.5%, with the currency risk hedged because both the assets and liabilities were denominated in yen. By the end of 2024 those positions had a market value of $23.5 billion against a cost of $13.8 billion. The weakened yen produced an additional $1.9 billion gain on the debt side alone between 2020 and 2023. In 2025 the expected dividend income from the Japanese holdings is around $812 million against interest costs on the yen debt of $135 million.

That's not a moat play. That's a man who looked at the specific conditions of the Japanese market in 2019, saw ultra-low interest rates, undervalued companies with strong cash flows, and a currency he could borrow in cheaply, and constructed a trade that exploited every single one of those conditions simultaneously. It's Singleton-level thinking applied to a completely different context.

The through line across Buffett's entire career is not moats. It's playing the best available hand. Cigar butts in the 1950s. Merger arb and activist investing in the 1960s. Quality compounders in the 1970s and 80s. Structured preferred deals during crises. Currency-hedged yield arbitrage in Japan. Each phase is a completely different strategy, each one perfectly adapted to the opportunity set at the time. If you only know the CNBC version of Buffett you're missing the most important lesson of his career.

Play the cards you're dealt

This applies to everyone, not just public company CEOs managing billions.

If you're an 18-year-old founder, you have an edge. You have energy that borders on irrational, you have no mortgage, no kids, no obligations, you can work from anywhere, you can take risks that a 40-year-old with a family literally cannot take. You can sleep on a couch and not care. You also have something that expires faster than people realize: successful people will take meetings with you because everyone wants to help an 18-year-old with ambition. You can cold email a CEO and get a response. You can ask for introductions that would be awkward coming from a peer. By 25 that starts to fade. By 30 it's gone. Nobody is taking a meeting out of goodwill with a 30-year-old, they're taking it because you have something they want. That's a completely different dynamic and if you didn't use the first window you missed it.

Use every edge you have right now. Play it hard. But understand that none of it is permanent. In ten years you won't have those edges anymore. You'll have different ones. Maybe you'll have a network, capital, pattern recognition, credibility. Play those when you get them.

If you're running a company that has a cost advantage because you built your supply chain in a certain country at a certain time, that's your edge right now. Play it. But don't assume it's forever. Tariffs change. Currencies move. New competitors show up with different cost structures. If you spend your whole life trying to protect that one advantage instead of looking for the next one, you will eventually get run over by someone who adapted faster.

If your product has a first-mover advantage in a new category, great. That's your card right now. But first-mover advantage is one of the most overrated concepts in business. Friendster was first out of the modern social networks. MySpace was next and dominated for years. There were over 20 search engines before Google launched in 1998, including Archie, Lycos, AltaVista, Excite, Infoseek, and Yahoo. Google wasn't first, wasn't second, wasn't tenth. It just showed up with a better product at the right time and executed better than everyone who came before it.

Singleton understood this intuitively. He never confused a temporary edge for a permanent one. He never fell in love with his own strategy. He never wrote some corporate mission statement about how Teledyne was fundamentally an acquisition company or fundamentally a share buyback company. He just kept asking a very simple question: given what the market is giving me today, what is the highest-return use of the capital I control?

That's it. That was the entire strategy.

Why this matters more now than ever

The rate of change in markets, technology, and geopolitics right now is faster than anything Singleton ever dealt with. AI is rewriting entire industries in months. Regulatory environments shift overnight. A tariff announcement can restructure global supply chains in a week. The idea that you're going to find one durable competitive advantage and ride it for 20 years is not just optimistic, it's delusional for most businesses.

As Bezos observed, he doesn't think consistency of thought is a particularly positive trait. The smartest people are constantly revising their understanding, reconsidering a problem they thought they'd already solved. They're open to new information, new ideas, contradictions, and challenges to their own way of thinking.

A handful of businesses will build true durable advantages that compound for decades. If you're one of them, congratulations, you've won the lottery. But most of us haven't and most of us won't. And the sooner you accept that, the sooner you can stop wasting time trying to build a fortress and start doing what the best operators in history actually did: find temporary advantages, ride them hard, and when the game changes, change with it.

Singleton didn't leave behind a clean narrative. There's no single sentence that captures what Teledyne was. There's no framework you can pull out of his story and stick on a PowerPoint slide. And that's exactly the point. The best operators don't give you clean narratives. They give you results. The messy, contradictory, impossible-to-reduce-to-a-tweet kind of results that make business book authors uncomfortable because there's no memetic story to sell.

Play the cards you're dealt. Play them well. And when the cards change, pick up the new hand and play that even better.