KNA Capital August 2026 Update

A few years ago my family and I took a day trip through Kentucky horse country, where we learned about a horse named Sham. Unless you follow racing, you've probably never heard of him, though in some circles he's considered the second-greatest racehorse of all time. He ran the 1973 Kentucky Derby fast enough to have won it in almost any other year. His problem was being born in 1970, the same year as Secretariat.

This month's letter uses Sham to work through something I keep running into when I study businesses: how much of an outcome is due to luck. I also cover a position I sold in September after a bad earnings report, and why its narrow moat made that decision easier than it would have been elsewhere in the portfolio.