Investment Philosophy

We believe security prices should represent the accumulated present value of future cash flows. All security prices efficiently reflect the majority opinion about future cash flows. While there is often wisdom across the breadth of the market’s accumulated opinions, the majority opinion is sometimes flawed, resulting in mis-priced securities.

While some market participants try to anticipate stock price movements, we do not. We form a view as to what a business is worth. This allows us to take advantage of volatility and emotion and buy assets at discounts to their value while avoiding the difficult game of trying to anticipate short-term factors which do not lend themselves to analysis.

Our focus on a business’ value, cash flow prospects and return structure will often result in the ownership of very good companies – those with persistently high returns – but will also result in ownership of lower return businesses priced too cheaply. We do not limit our investment orientation to “good businesses” or “good managements” – rather, we seek stocks where the majority opinion is most flawed.

Axiomatic to our investment approach is the idea that we will be different than the market and other investors – in opinion and portfolio structure.