We aim to own wonderful businesses identified through rigorous research.
We have a belief that if we pay attractive prices to own businesses that are higher-quality and faster-growing than average, then over the long run our portfolios should earn an above-average return with less risk.
We are rigorous.
We have a deep fundamental process, both quantitative and qualitative, to determine which businesses meet our checklist. We do not compromise.
Durable competitive advantages
We look for businesses with wide economic āmoatsā: long-term competitive advantages that allow the companies to earn outsized profits over time. Examples of moats include network effects, switching costs, brands, and economies of scale.
Strong growth prospects
One of the keys to outperforming the market is identifying companies that can grow sustainably faster than the average. We look for secular industry tailwinds, like the shift from brick-and-mortar retail to eCommerce or the shift from on-premise to cloud-based software.
High returns on capital
Return on capital simply means dollars in vs. dollars out. As a shareholder, we allocate capital to a business when we invest - how many dollars can we expect to receive in return?
Margin of safety
Valuation is important. We seek companies that are trading at a meaningful discount to our estimate of their long-term intrinsic value, with little to no risk of permanent capital impairment.
We are picky.
There are ~4,000 companies traded on major U.S. stock exchanges. We invest our clients in only ~20.
Flagship20 stocks
Opportunities20 stocks
Offshore20 stocks
We are long-term focused.
We arenāt a get-rich-quick scheme. We aim to hold businesses that can compound capital at high rates of return over a 3-5 year time horizon. Itās in the ethos of our entire organization.
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"When you're in a gold rush, it's better to be the one selling the shovels."Investing Adage