Our Investment Process

Our investors’ portfolios are built on a company by company basis. Stock selection is not driven by top down macroeconomic considerations, sector allocation, or attempting to mimic an index in a particular way.

First, we identify companies that possess advantages in their field of business that should allow them to generate very high returns on assets, abundant free cash flow, and protection from price competition. We focus on companies domiciled in North America where disclosure is clearly regulated and management is close at hand.

Second, we scrutinize, and generally meet personally with, the top executives of each company looking for the set of characteristics that we believe are required for sustained business success and an accompanying build-up of shareholder wealth.

Third, we make an estimate of each company’s intrinsic worth based on an evaluation of its asset values, estimated future cash flows, and management team. This estimate is independent of its stock price and is determined by its relative attractiveness compared to alternative investment vehicles and to its own trading history. We will not purchase a security unless it is available at a discount from our estimate of value that is great enough to provide a meaningful margin of safety and the prospect of a satisfactory return even if our optimistic assumptions fail to materialize.

Our investors’ portfolios are built on a company by company basis. Stock selection is not driven by top down macroeconomic considerations, sector allocation, or attempting to mimic an index in a particular way.