Core Investing Principles
Owning great businesses for the long term is the best investment strategy for generating long-term wealth and meeting one’s cash flow needs. Many great businesses are listed on the public stock exchanges. We believe in becoming part-owners of such businesses by buying their shares at fair prices and holding them to realize long-term compounded growth and dividend income. Although stock prices can change by the second, we are investors, not traders seeking to make gains from periodic stock price movements. Market behavior can become irrational, and prices can become disconnected from the fundamental values of those businesses. If one has done the analysis and understands those values, such periods can represent opportunities to acquire great businesses at a discount, rather than times of increased risk. We do not equate market price volatility with risk. Risk is the likelihood of permanent loss of capital.
Investment Process
We construct a portfolio of diligently researched individual stocks and at times, debt, to address the specific needs of a client, e.g., income generation, income plus some degree of growth, etc. We may incorporate one or more private funds for a portion of a client’s portfolio to access a sector unavailable through public investments that we find compelling. Such funds would have superior managers with a record of strong and consistent performance and would typically be those in which we have invested our own assets over a period of years. Once in place, we actively monitor the businesses in the portfolio for their anticipated growth and stability. As long-term investors, we expect to conduct only occasional transactions, such as adding to the portfolio when opportunities arise, or new money is provided; selling when business fundamentals change or to reallocate to more compelling opportunities; etc. While tax efficiency is secondary to portfolio growth and income, our buy and hold process may produce certain tax benefits.