Concentrated portfolios

We believe that enhanced returns can be realized through holding a concentrated, conviction-weighted portfolio of companies with attractive business models and opportunities to generate consistent, long-term growth of intrinsic business value. As such, we build our portfolios with careful consideration of each company’s risk and reward profile. 


Long-Term Focus

Our investment time horizon is three to five years, resulting in low turnover. We prefer to hold companies with steady, stable business models and end markets, and to hold them for three-to-five years or more.


Intrinsic business value

We define growth differently than most other investors; cash economics is our central focus. More so than attractive revenue and earnings growth, its returns on invested capital and its ability to generate free cash flow, i.e. its intrinsic business value, are key to the team’s evaluation.  Our portfolio is full of companies that, beyond cash generation, have clear, sustainable competitive advantages, unique secular opportunities, and exceptional management teams who are dedicated to the creating shareholder value.  


 
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Our Process

Our investment process is defined by our fundamental, bottom-up nature.

Idea generation is organic, often originating from a change or catalyst within a company or sector.  We do not organize our research efforts around sectors, industries, or countries; all investment team members are generalists. As such, we are charged with finding the most attractive companies in the marketplace, irrespective of sector or geography. Investment team members are responsible for providing in-depth fundamental research utilizing all relevant information to build a comprehensive thesis on a potential investment.  Our research covers key criteria, including an analysis of competitors, management compensation structures and an assessment of the company’s fundamental risk/reward profile, among other topics in addition to a ten-year discounted cash flow model. We visit the companies in which we invest. Our deep understanding of each company we hold and evaluate is a key differentiator.

Company-specific research and portfolio construction considerations for all strategies are discussed regularly with the entire investment team. Every idea deemed worthy of consideration is presented to the group for vetting and deliberation. While the group vetting process is an important feature of our “culture of debate”, the named portfolio managers for a strategy are ultimately responsible for portfolio construction.  We build benchmark-agnostic portfolios and gauge risk and reward to determine the weighting of each holding in each portfolio.