The goal of our investment strategy is to earn the highest possible return over multiple investment cycles while managing the risk of long term capital loss.
In order to achieve this objective we implement our proprietary investment process, which begins by identifying exceptional management teams. We view ourselves as a passive partner in the companies that we invest in. As such, we believe that our most important duty is to identify great partners to align ourselves with. To find these exceptional partners we monitor communications between management teams and the investment community. We analyze this communication to identify management teams who we believe can be trusted to make decisions that are in the best interest of shareholders. Specifically we look for language that demonstrates that the business is being run by people who 1) give an honest and accurate assessment of the present condition of the enterprise 2) are forthright and proactive about identifying and mitigating risk and 3) have the ability to formulate and execute a strategic vision.
Once we have identified exceptional partners, we use the tools of value investing to evaluate each investment opportunity. Value is the primary determinant of all decisions that we make to purchase or sell a business. We will purchase shares of businesses when we believe that the market price is too low relative to a company’s intrinsic value and we will sell if the market price exceeds our estimation of potential value.
Under normal market conditions we will invest in 15 to 45 securities and the asset class allocation among these securities is primarily determined by value as well. We are unconstrained with regards to asset allocation and may hold up to 100% our clients’ assets in equity securities or up to 100% of its assets in fixed income securities depending on where we find compelling value. If we do not find enough investments that meet our criteria of compelling value we may maintain without limitation a significant portion of client assets in cash or cash-equivalents.
We have the majority of our personal net worths invested in our investment management strategy, because this strategy is designed to represent our untethered, unfiltered opinion of what we believe is the best way to earn the highest possible long term returns in public markets.
While we do believe that this strategy is suitable for an individual’s entire net worth, we should note that this strategy is only intended to be one piece of an investor’s portfolio. We believe that investors should diversify their full savings among multiple managers. For more information on this investment philosophy, please see our wealth management section.