We are long-term investors with an enduring investment philosophy.
Earnings drive stock prices.
As long-only investors, we believe earnings drive stock prices, and we are committed to investing in companies that we believe are high-quality and have sustainable earnings growth.
The market is disproportionately focused on the short term.
The market offers very limited opportunities to yield an information advantage and is disproportionately focused on shorter term projections. As a result, investors often fail to effectively differentiate companies based on their long-term prospects. Stocks are often mispriced due to this domination of short-term thinkers.
Our aim is to exploit the mispricing of long-tailed assets in a market that is intensely focused on the next quarter or year, but less interested in a company’s prospects for profitable growth over the next five years and beyond.
Quality should be the defining characteristic of the portfolio.
Our core valuation philosophy creates an investment style that we would classify as growth and describe as buying high-quality, sustainable businesses at reasonable prices. We believe that in the long run, a company’s underlying strength should outweigh its macro environment, and we can only truly understand a company’s strength through bottom-up analysis.
Risk management should be the first consideration when investing.
Risk management is intrinsic to our investment process. We evaluate risk at the company level and focus on absolute risk (i.e., permanent loss of capital) versus relative risk. We specifically look at the end consumers of the businesses in which we invest. We are confident that this approach gives us a better sense of both company risk and of overall portfolio risk.