OUR INVESTMENT PHILOSOPHY
Fundamentally, we're value asset managers that believe in purchasing quality companies at valuations meaningfully below historical averages through a concentrated portfolio of only our best ideas while also utilizing cash as a strategic asset.
Our definition of value is relative - relative to the historical average of the security itself as well as to its peers. We find that these opportunities typically develop over the course of several quarters when the market starts to put too much emphasis on recent news or conditions that are not favorable for the company. We capitalize on this recency bias and are not bound by market capitalization or absolute valuation.
We like quality companies. We think quality companies are more likely to return to their historical valuations. By quality we certainly mean financial strength, but we also define quality as companies that have a commanding brand - as demonstrated through consistent and predictable earnings or consistent earnings growth. We also define quality as companies that simply have undervalued assets.
We believe in having a concentrated portfolio. We're interested in only really good ideas, and if they're not really good ideas we don't want to force an OK or average idea. If we can't find a really good idea - we'd rather go to cash. When you buy from us, you're buying what we believe are really good ideas and if we don't have them, we won't hold them. We believe, our ten-year record shows this is not just a good way to generate alpha by picking the right stocks, but it's also a good way to mitigate risk.
We believe that utilizing cash as a strategic asset is vital to our strategy. There are times when equities are not a great place to be. If we don't see compelling ideas in the market, we will have elevated cash positions. In fact, for very short periods of time, we may go 100% to cash. Infrequently, for a short period of time, but we do view cash as an overall important part of the portfolio and we use it as a strategic asset to both enhance returns and to mitigate risk.