Our approach to managing portfolios is driven by our beliefs about how the markets work and by our skill set as an investment team:
Bottom up stock selection provides us with the best opportunity to generate consistent excess returns.
We analyze and value stocks as partial interests in businesses, and our investment time horizon reflects this mindset.
We are value investors, but we do not focus on low expectation businesses. Investment flexibility within a manager’s area of competence is better than focusing on strict style conformity.
We will not own a stock if we cannot effectively value the company within an acceptable confidence range.
Digging deep into company fundamentals is important. However, it is crucial that we understand the 3 or 4 factors that will “move the dial” over time, how the market is currently pricing the stock, and where our insights differ from consensus.
Good businesses deliver consistent growth of intrinsic value over time. Discounted valuations provide downside protection and add to return as the valuation gap narrows.
Investing in good businesses at discounted prices is a simple concept but a highly effective approach. While no strategy works in all markets, behavioral finance factors and market noise keep this methodology robust.