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Pat Dorsey: The Nuances of Investing in Moats (Capital Allocators, EP.509), Sonic AI
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Pat Dorsey: The Nuances of Investing in Moats (Capital Allocators, EP.509)
Capital Allocators
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Jul 6, 2026
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1:17:43
Interview
Pat Dorsey: The Nuances of Investing in Moats (Capital Allocators, EP.509)
From
Capital Allocators
Pat Dorsey
(Founder, Dorsey Asset Management, guest)
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Executive Summary
Pat Dorsey details the origin of the 'economic moat' framework, which he developed at Morningstar by analyzing historical data to identify sources of sustainable, high returns on capital.
Dorsey's investment philosophy has evolved to heavily prioritize management quality and capital allocation (a 70% weighting) over the business's moat (30%), critiquing the idea that a great business can be run by anyone.
Dorsey Asset Management employs a concentrated, long-only strategy, focusing on 10-15 global companies, primarily in B2B sectors, with a strong preference for businesses that have a long runway to reinvest capital at high rates of return.
He critiques common financial metrics, arguing that Return on Invested Capital (ROIC) is less useful for modern asset-light businesses and that 'sum-of-the-parts' valuations are often misleading for passive minority investors.
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The Economic Moat Framework
The Primacy of Management and Capital Allocation
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Processed Jul 6, 2026
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