Our interaction with our clients is comprised of 3 stages:
1) We endeavor to understand your investment needs and goals, and discuss how to best meet them. This stage consists of composing your Investment Policy Statement which will guide asset allocation decisions going forward.
2) We carefully implement your investment strategy, taking into account the state of the markets as well as liquidity and tax considerations.
3) We provide consistent and clear portfolio reviews and performance reports, and adjust your investment strategy if or when your needs change.
We are first and foremost value investors seeking investments that provide security of capital coupled with very long term growth prospects. There are a number of core principals we follow when evaluating investment opportunities:
Safety of Principal: Our most important task is to minimize the risk of permanent capital loss. We have found the best way to avoid permanent capital loss is to invest in businesses that are simple, stable, predictable, free-cash flow generative, and that have sustainable competitive advantages. These businesses increase in value little by little every day, and over long periods of time have relatively low instances of permanent capital losses.
Long-Term Growth: We look to invest in businesses that have long term prospects for growth. Often these businesses are essential to an industry or modern civilization, and take advantage of structural changes, such as increased use of technology across the globe, or growth in developing market populations.
Liquidity: It is imperative that we are able to exit and enter investments with ease, especially when in response to the changing needs of our clients. Illiquid investments are particularly hard to exit, something which many investors fail to appreciate until they really need their money and can’t access it easily.
Low Leverage: We avoid leverage, both in our portfolios, and also in the companies in which we invest. The cause of many business failures and permanent losses of capital has been leverage coupled with a cyclical business. By seeking investments with minimal leverage, and stable and predictable business models, we hope to avoid one of the main causes of permanent capital losses.
Simplicity: We focus on simple, understandable investments. Complexity may seem appealing, however we have found that it often fails investors when they need it most. Key to long term wealth creation is the ability to understand what you own, because it gives you the confidence to hold investments through market volatility, and avoid selling or buying at inopportune times.