Approach & Process

Our objective is to compound our clients' capital over long periods of time by investing in a select few publicly traded businesses. We search globally for these investment ideas, and our security selection decisions are guided by an absolute value discipline and are informed by immersive, bottom-up research. This philosophy is unchanged since our founding in 2001.

We implement our philosophy through immersive research, an iterative process, and deliberate portfolio construction.

Immersive Research

  • Our investment process is informed by deep, on-the-ground research.
  • This research often includes, but is not limited to, review and analysis of company filings; discussions with management; and conversations with the company’s customers, competitors, and suppliers.
  • We travel extensively to observe and interact with a company’s customers, assess its competitors, evaluate its suppliers, meet its managers, visit its facilities, and survey its operations in action.
  • The purpose of these trips is multi-faceted:  to learn about companies in which we were already interested; to find new companies to research; to better understand and appreciate the culture, people, and consumers in these countries and regions; and to get a real sense of the economies and legal systems in these places.
  • We discover and confirm facts ourselves – first-person observations in the field are critical to appropriately evaluate each investment opportunity.
  • We will only make an investment decision when we feel that we are adequately informed about the potential range of operational outcomes for a business.
Study Our Travelogue
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Case Studies

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Iterative Process

Our underwriting process is collaborative and
iterative and designed to:

  • Challenge Assumptions:
    Which of our conclusions
    about a business could
    be wrong?
  • Consider Psychological
    Errors of Decision-Making:
    What biases are unduly influencing our investment process?
  • Refine Conclusions:
    How should we update our understanding of a business based on new findings?

Four core investment criteria guide our idea generation
and underwriting process:

Circle of Competence

Our ability to recognize the limits of our knowledge is as important as our ability to execute competencies. We must be able to understand the core economics of a business and reliably predict its financial prospects to avoid mistakes that lead to permanent losses of capital.

Price

We require a significant discount to our conservative estimate of intrinsic value. This discipline helps to prevent or limit permanent capital loss when we make mistakes and to provide outsized returns when we are correct.

Business

We evaluate whether companies have durable competitive advantages that produce predictable cash flows and attractive returns on capital. Without this “moat,” a company’s results are difficult to effectively forecast.

People

We seek to invest alongside trustworthy and capable managers who treat shareholders like partners. Other important management traits include intellectual honesty, energy, consistency, and a thoughtful capital allocation framework.

Investment Ideas

The Process: Investment ideas must survive a rigorous, intense underwriting process. Few of these considered investments survive our efforts to "kill" them through the disciplined application of our core investment criteria.

The Result: a portfolio that is markedly different from any benchmarks and consists only of our most informed ideas.

Investment Ideas

Circle of Competence

Key Question: Do we reliably understand the core economics of the business?

Business

Key Question: Is the business high-quality and predictable with identifiable competitive advantages and sustainable earnings?

People

Key Question: Does management have integrity, energy, intelligence, and a history of maximizing long-term shareholder returns?

Price

Key Question: Is the price substantially less than our conservative appraisal of the business?

Invest

Curious about the process behind how we
manage and build our portfolio?

Building Our Portfolio