HOW WE INVEST
HOW WE INVEST | OUR INVESTMENT PHILOSOPHY
Our goal is to outperform over a long period of time. Everything we do is with that in mind.
At times this may make us look foolish in the short run, but we are perfectly willing to accept this if we believe it maximizes the portfolio’s long-term return. As such, and because there can be a lot of randomness in short-term results, we ask that our performance be judged over a long period of time.
There are three core elements of our investment philosophy:
Our focus is always on the long-term merits of an investment candidate rather than short-term trading factors or recent growth rates. The long-term appeal of a stock is a function of two variables: the fundamentals of the business (such as its competitive advantages) and the prevailing price. With more and more market participants adopting a shorter-term mentality, we believe our longer time horizon differentiates us even more. Paradoxically, the ease and speed with which one can access data these days exacerbates this effect - because it makes the short-term game more competitive, in our opinion.
As investors in the truest sense of the word, we tend to trade infrequently. Our preference is to find strong, durable businesses that are trading at attractive valuations and hold them for a long time. Naturally, this meshes with our long-term mindset. In times of market dislocation or volatility our trading activity tends to increase as we take advantage of newfound opportunities.
We limit the number of holdings (generally 25-40) and sectors in our portfolios, focusing our investments in areas we find attractive and avoiding those that don’t meet our standards. Such an approach may sound obvious, but it sets us apart from managers who build portfolios so as not to deviate too much from their benchmark. Thinking independently and having the conviction to act when opportunities present themselves is critical to achieving outperformance.