Investment Strategy

We practice the investment strategy of selecting stocks that trade much less than their intrinsic values. A fundamental part of our investment strategy is to ensure that there is a margin of safety our investments. This margin of safety allows our investments to be made with minimal downside risk and outperform the market over the long term as the stock prices will eventually reflect the fundamentals and values of the underlying stock.

Value Investing

  • We make a long-term investment in a company with durable competitive advantages when the market price does not fully reflect its growth potential
  • We believe that investing in a few well-selected companies provides sufficient diversification

Focus Investing

  • On average, our concentrated portfolio contains 20 to 25 stocks; once we purchase a stock, we typically hold on to it for 6 months to 3 years
  • We believe that investing in a few well-selected companies provides sufficient diversification

Buy and Sell Decision

  • We buy only when there is a sufficient margin of safety
  • We sell when the market price appreciates sufficiently relative to the company’s intrinsic value
  • We sell when we find better investment opportunities

Target Companies

  • History has shown that, over time, the best way to protect and build capital is through the long term ownership of outstanding businesses. We define an outstanding business as one that, at a minimum, meets the following criteria:
    - Understandable business model
    - Low-cost structure relative to other companies in the same industry
    - Predictable prospects over the long term
    - Strong financial position with little or no debt
    - Consistently growing cash flow
    - High returns on net invested capital
    - Effective, honest and shareholder-oriented management
  • We are interested in businesses that provide products or services that are essential to customers and have few substitutes
  • As a rule of thumb, investing in a great business with mediocre management is safer that investing in a mediocre business with great management