Strategy & Approach
There are many different and successful investment strategies. Indeed, our way is not the only way. However, of one thing we are certain: changing one’s strategy to fit the prevailing market trends will, in most cases, lead to poor investment results.
We abide an approach which emphasizes companies that have demonstrated consistent and superior profit growth and high returns on capital. We place particular emphasis on a select group of common stocks that we refer to as “growth bonds” -- companies whose dividends are as certain as the interest on a risk-free U.S. Treasury bond and whose cash flows provide increased dividends year-after-year-after-year.
Our decision-making process is classic “bottom-up” stock selection. We do not engage in market-timing and we do not base security selections on short term assumptions for economic growth, interest rates, or inflation. Still, we monitor these critical variables closely in order to avoid excessive exposure to significant and abrupt changes which might have adverse consequences for our clients.
We rely on our own fundamental research to identify companies which are engaged in businesses with superior market economics. We prefer businesses which are understandable and relatively predictable. We invest exclusively in companies that exercise long-lasting competitive advantages. Given these standards, our clients’ portfolios are typically invested in just 15-20 companies and the annual portfolio turnover is very low.
True, the high quality companies of interest to us are rarely undiscovered. Yet opportunities arise because the majority of investors are short-sighted – chasing the fads, themes, news and rumors which often drive stock prices in the short term. History confirms that differences between market prices and intrinsic value are always corrected eventually – sometimes quickly and sometimes over a few years.
In short, we are investors – not traders – and we rely on outstanding businesses and managers to create wealth for our clients over the long term.
Prospective clients are invited to view our Schedule of Investments.
We abide an approach which emphasizes companies that have demonstrated consistent and superior profit growth and high returns on capital. We place particular emphasis on a select group of common stocks that we refer to as “growth bonds” -- companies whose dividends are as certain as the interest on a risk-free U.S. Treasury bond and whose cash flows provide increased dividends year-after-year-after-year.
Our decision-making process is classic “bottom-up” stock selection. We do not engage in market-timing and we do not base security selections on short term assumptions for economic growth, interest rates, or inflation. Still, we monitor these critical variables closely in order to avoid excessive exposure to significant and abrupt changes which might have adverse consequences for our clients.
We rely on our own fundamental research to identify companies which are engaged in businesses with superior market economics. We prefer businesses which are understandable and relatively predictable. We invest exclusively in companies that exercise long-lasting competitive advantages. Given these standards, our clients’ portfolios are typically invested in just 15-20 companies and the annual portfolio turnover is very low.
True, the high quality companies of interest to us are rarely undiscovered. Yet opportunities arise because the majority of investors are short-sighted – chasing the fads, themes, news and rumors which often drive stock prices in the short term. History confirms that differences between market prices and intrinsic value are always corrected eventually – sometimes quickly and sometimes over a few years.
In short, we are investors – not traders – and we rely on outstanding businesses and managers to create wealth for our clients over the long term.
Prospective clients are invited to view our Schedule of Investments.
