Welcome to The Business Buying Academy with Sieva Kozinsky. Here's what we have in store for you today:

1. Invest like a King (how to protect your Castle)
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2. A cash-flowing engineering firm
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3. Starting a holding company by accident

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​Learn about Vesto here​

(Thank you to Vesto for sponsoring today's newsletter)

In the world of investing, few concepts are as timeless and powerful as the economic moat.

In investing a moat is a company’s sustainable competitive advantage that allows it to fend off competitors and maintain profitability over the long term.

Think of it as a medieval castle surrounded by a wide, impenetrable moat. Rival businesses struggle to cross, ensuring the castle (the company) thrives.

Why Economic Moats Matter

Why does it matter?

If you're a fan of Warren Buffett like I am, you probably already know.

Here are some of the advantages a company might enjoy after building a wide moat:

• Pricing Power: The ability to raise prices without losing customers.
• Higher Margins: Greater efficiency and profitability compared to competitors.
• Longevity: A durable business model that compounds wealth over decades.
• Risk Mitigation: Protection against market volatility and unforeseen challenges.

In contrast, companies without moats are vulnerable to price battles (especially during a Trade War like the one we have now), technological obsolescence, or aggressive competitors, making them riskier bets for long-term investors.

Types of Economic Moats

Economic moats come in various forms. Here are a few of them:

• Brand Loyalty: A powerful brand that customers trust and prefer (e.g., emotional attachment or prestige).
• Cost Advantage: Lower production or operational costs that allow undercutting rivals.
• Network Effects: A product or service that becomes more valuable as more people use it.
• Switching Costs: High barriers that make it costly or inconvenient for customers to switch to a competitor.
• Patents or Proprietary Technology: Exclusive rights to innovative products or processes.

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Real-World Examples of Moat-Worthy Companies

Let’s take a look at a few of my favorite companies with moats:

Apple (Brand Loyalty & Ecosystem)

Apple’s moat is built on its iconic brand and tightly integrated ecosystem. Customers who own an iPhone are more likely to buy a Mac, iPad, or Apple Watch due to seamless connectivity and familiarity. This loyalty, combined with Apple’s premium pricing power, creates a formidable barrier to competitors. The Trade War with China will test Apple's moat - but I'd bet that they'll be much better off than other companies that don't have the brand loyalty of Apple.

Amazon (Network Effects & Cost Advantage)

Amazon’s e-commerce dominance is fueled by its vast network of buyers and sellers, reinforced by Prime’s subscription model. The more users join Prime, the more valuable it becomes, locking in customer loyalty. Additionally, Amazon’s scale allows it to operate with razor-thin margins, undercutting smaller retailers while investing heavily in logistics and cloud computing (AWS).

Coca-Cola (Brand & Distribution)

Coca-Cola’s global brand is synonymous with refreshment, giving it unparalleled pricing power and shelf space in stores worldwide. Its distribution network, spanning restaurants, vending machines, and retailers, is a logistical moat that competitors struggle to replicate. Try to think of the last time you went even a day without seeing Coca-Cola products offered for sale right in front of you.

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....but Moat isn't Limited to Huge Companies

The examples I gave above are some of the largest companies in the world - but that isn't a prerequisite for having a moat. Plenty of SMBs have powerful moats in niche markets and specific geographies. The HVAC company down the street with a great reputation in the community has a strong moat in its city.

How to Spot a Moat

When evaluating a company, ask yourself:

• Does it have a unique advantage that competitors can’t easily copy?
• Can it maintain high profitability even during economic downturns?
• Are customers “locked in” through loyalty, habit, or high switching costs?
• Look for evidence in financial metrics like consistent revenue growth, high return on invested capital (ROIC), and stable or expanding profit margins.

Why Moats Are Crucial for Long-Term Investing

At its core, investing is about compounding wealth over time. Companies with economic moats are the engines of that compounding, delivering steady returns while minimizing the risk of disruption. Focusing on businesses with durable advantages helps protect your capital long-term.

As Warren Buffett famously said, “In business, I look for economic castles protected by unbreachable moats.”

Make that your guiding principle, and your portfolio will thank you for decades to come.

🔑 A cash-flowing engineering firm building the backbone of energy infrastructure

There is a ton of hype investment flowing to AI startups right now, but what catches my eye are the quietly essential businesses behind the scenes. Here's one you probably haven’t heard of-but should.

Cronus is a technical design and engineering firm that specializes in high-performance pipelines for complex or extreme environments-think offshore oil, hydrogen, CO2, and more.

This isn’t a speculative energy bet. It’s a critical-path player in an industry where failure isn’t an option. And while most eyes are on consumer brands, Cronus has quietly built a roster of blue-chip clients and a reputation for solving the hardest infrastructure problems.

Why this stood out:

• Mission-critical work. They design the pipes that move dangerous or sensitive materials—from acetylene to hydrogen. It’s high-trust, high-margin work.
• Resilient revenue. Despite a turbulent energy market, they’ve maintained steady cash flow, diversified across oil majors, industrial gas players, and MLPs.
• Energy transition exposure. With hydrogen and CO2 design projects under their belt, they’ve got a seat at the table in the next era of infrastructure.
• Succession already mapped. The founder is stepping back, but a strong leadership bench and detailed value creation plan is in place.

This is the kind of deal that doesn’t show up in pitch decks. But it’s real, profitable, and built to last. If you’re looking for businesses with durability and upside, you’ll want to take a closer look.

​See the deal on Mainshares​

Thanks to Mainshares for sponsoring today's newsletter​
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🔑 He Bought 9 Businesses - Here's How He Built a Holding Company

My friend Rafael bought 9 businesses - and built a holding company on accident.

He walked me through how he and his partner bought two wonderful businesses - then waited four years to buy their third (even though they were actively trying to buy one the whole time).

Listen to this breakdown of the different holding company strategies if you're at all interested in buying multiple companies.

​Watch on YouTube​

​Listen on Spotify​

​Listen on Apple Podcasts​

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Have a great day,

Sieva

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Disclaimer: nothing here is investment advice. Please do your own research. The information above is just for information and learning.

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