Our exceptionally disciplined value investment philosophy relies on a unique combination of core principles that have proven to be most effective over time.
Margin of Safety
To identify mispriced opportunities, we conduct an exhaustive qualitative and quantitative analysis on a security’s underlying economics. The knowledge acquired during this analytical process is distilled and then utilized to calculate a conservative intrinsic value range – our numerical expression of a security’s fundamental risks and prospects.
The probability of a permanent loss of capital, which would occur if our intrinsic value range fell below the cost of our investment, is our measure of risk. We incorporate multiple complementary preventative steps into our investment process that are designed to reduce the occurrence of this outcome.
Our foremost protective measure is selecting investments where the market value is materially below its intrinsic value range. In doing so, the gap between these two values – the market value and intrinsic value – simultaneously represents an investment’s Margin of Safety and opportunity for returns. Thus, we focus on optimizing our investment portfolio by maximizing its Margin of Safety.
An effective investment philosophy adapts to altering global capital market environments. To promote the adoption of efficient asset allocation practices – our flexible investment mandate was specifically designed to accommodate evolving investment conditions. Accordingly, we may simultaneously and opportunistically invest in equity, fixed income, and related instruments globally.
Through an intimate understanding of our investments, we develop a thorough comprehension of our accumulated exposures – and then carefully manage them. This approach, accompanied by our long-term investment horizon, provides us with the comfort to deliberately maintain an advantageous level of concentration in those select few opportunities that will provide the greatest potential to safely grow our capital.