PHILOSOPHY

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What do we believe about value investing?

1. Value Is About Perspective:  So many equity investors focus on near-term earnings and market developments.  We investigate and analyze the companies we own for our clients part-by-part and from the bottom up to identify long-term shareholder value.  Our research is proprietary and driven by the conviction that the durable free cash flow a company generates is the best predictor of long-term worth.

 

2. Company Value Can Be Destroyed By Poor Management:  Frequently, quantitative driven investors ignore that companies are run by people.  We believe a thorough understanding of a company’s value potential for shareholders combines both rigorous quantitative analysis and a nuanced  assessment of management teams, operating vision and execution capacity.  Competence, compensation structure, insider ownership and overall alignment with shareholders are key indicators of whether a valuation mis-match we identify presents an investment opportunity or is simply an accurate reflection of a broken company.

 

3. Deep Value Opportunities Require a Longer Horizon:  Our goal is to invest in companies at price points that reflect a 40% to 50% discount to fair value.  When businesses trade at these levels of discount, we understand that there is a reason.  We are comfortable with multi-year investment horizons to allow for business operations to improve and the valuation gap to begin to close.  Our multi-year investment horizon (frequently 3 – 5 years) also results in lower overall trading costs and a tax efficient portfolio.