Grow your capital through all economic environments.
How will we accomplish this goal?
We have a two-pronged approach to delivering value-add:
1. Getting the big picture right
We have spent many years modeling the market at the macro level to gain an understanding of the key factors that influence equity returns over the medium and long-term. These factors have been reliable over multiple economic cycles over the past 50 years and are logical and intuitive. With this in mind, and given that the majority of your equity returns are a function of the direction of the overall market, there are certain times when it makes sense to have more or less exposure to the market. This macro framework guides our overall market exposure level at any point in time, which can vary from leveraged long to short.
2. Individual stock selection
This entails a focused approach to the types of companies we select, preparation, and patience.
We seek enduring value opportunities in the small to mid-cap space, where solid research can uncover good opportunities. We emphasize "enduring", because company lifecycles are getting shorter which reduces the predictability of future cash flows; this is integral to the types of companies we select, as well as how they are valued.
Our preparation entails an ongoing and active research effort to maintain an inventory of 50-100 well-researched ideas of companies that we wish to own for the long-term and an inventory of 10-20 companies that we deem are significantly overvalued by the market. While the majority of candidates on our list will not currently be trading at a price that will entice us to buy or sell, with this preparation, we are in a position to take advantage when the market, from time to time, delivers these opportunities.
Exercising patience in waiting for these opportunities is arguably the single most important trait for investing success cited by the legendary minds in investing. Having a large inventory of investment candidates facilitates implementing this discipline.
Our value proposition in sum
We believe that the combination of our proprietary macro framework, a sizeable list of well-researched investment candidates, and a disciplined and patient approach to allocating your capital, will deliver superior returns and enduring value over the full cycle.
We recommend reviewing the strategy for a more detailed explanation of the mechanics. After that, please contact us if you have questions, or to get started.