Strategy

Investment Strategy

We primarily seek to invest in industry-leading businesses that we understand well and that are priced in the market at a fair price in relation to our estimates of their future cash flows. Doing this provides us with a margin of safety. We assess this margin of safety by analyzing companies from the bottom up. This means we study regulatory filings, financial statements, business periodicals, and interview industry sources. Our diligence process focuses on learning about a company’s free cash flow generation, product or service quality, competitive industry position, financial condition, prospects for future profitability, and the quality of its management.

We avoid investing in companies under this strategy just for the sake of investing. If we feel that the market does not offer attractive opportunities, it is likely a large portion of the funds in our partnership’s may be invested in lower-risk assets (such as cash) until we identify opportunities to invest in securities with higher potential returns.

Portfolio Construction

Because opportunities matching our investment criteria are rare, our partnerships may concentrate its holdings in a limited number of securities (between 5 to 15 positions). In pursuing this strategy, we have no particular market capitalization requirements. Moreover, we purchase securities with a long-term investment horizon (typically 1 to 5 years), seeking to achieve long-term capital appreciation.