INVESTMENT PHILOSOPHY OVERVIEW

High Quality.  Long Term.  Valuation Oriented.  Independent Thinking

OVERVIEW

"Choosing individual stocks without any idea of what you're looking for is like running through a dynamite factory with a burning match. You may live, but you're still an idiot."  Joel Greenblatt
 

At the core of our process we buy businesses:

  • With stable or growing competitive advantages, 

  • With long growth runways,

  • Run by smart and honest managers (preferably with a lot of skin in the game),

  • At a good or fair price
     

We follow a disciplined, research intensive (Quantitative and Qualitative) process to assess industry and business economics, management competence & quality and overall market dynamics before a stock makes ​it into the portfolio.  Our preferred buy is good business at fair prices which we can hold for the long term.  Since, good businesses at fair to cheap prices are rarely offered in the market, we may have end up owning fair businesses at wonderful prices, till the market offers up opportunities to swap them for better business at reasonable/fair prices.  We are Sector and Benchmark agnostic, reacting only to the opportunity set offered to us at any given point in time.  We may opportunistically trade in lower quality names offering good risk reward if the markets offer them to us.  ​

 

INVESTMENT PHILOSOPHY OVERVIEW

High Quality.  Long Term.  Valuation Oriented.  Independent Thinking

RISK & SAFETY

"All I want to know is where I am going to die, so I will never go there." - Charlie Munger
 

To Minimize the risk of permanent capital loss, we avoid :

  • Excessive Leverage

  • Poor Liquidity

  • High Customer Concentration 

  • Business Models with High Chance of Disruption 

  • Poor Accounting Quality/ Manipulation

  • Very Low Insider Ownership and Poor Management Incentives

 

INVESTMENT PHILOSOPHY OVERVIEW

High Quality.  Long Term.  Valuation Oriented.  Independent Thinking

QUALITY

"Whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down."

- Warren Buffett
 

Buy high quality business at the right price and till business quality or expected forward returns degrade.  We look for understandable and predictable business with following attributes:

  • High or Improving Returns on Capital

  • Stable or Growing Competitive Advantages

  • Good or Improving Industry Structure

  • Cash Generation and Conversion

  • Low Capital Intensity

  • Differentiated Business Models

  • Capital Allocation Discipline

  • Culture of Creating Sustainable Growth

  • Integrity
     

Great Businesses are rarely available at discount prices.   In that case, we may buy acceptable quality at reasonable prices​

 
 

INVESTMENT PHILOSOPHY OVERVIEW

High Quality.  Long Term.  Valuation Oriented.  Independent Thinking

VALUATION

" A High Quality Asset can constitute a good or a bad buy, and a Low Quality Asset can constitute a good or bad buy.  The tendency to objective merit for investment opportunity, and the failure to distinguish between good assets and good buys, gets most investors in trouble"  Howard Marks
 

We calculate, conservatively, a range of instrinsic values and IRRs for each investment candidate.   We buy only when our thresholds are met.  


PORTFOLIO CONSTRUCTION OVERVIEW

High Quality.  Long Term.  Valuation Oriented.  Independent Thinking

PORTFOLIO CONSTRUCTION

A collection of highest anticipated return stocks does not necessarily make the best portfolio.  The best portfolio is the one which meets clients goals while taking the least risks.

After determining each clients goals and risk appetite, we create a custom portfolio of vetted securites in one, some or all of the following categories:

  • Large Cap Stocks

  • Small and Mid Cap Stocks

  • Closed End Funds

  • International Stocks

  • Bonds, Preferred Stocks and Income Securites