What We Are
We are focused on the long term. Our time horizon is decades instead of days, months. or next quarter.
We believe that risk is the probability that a business performs materially worse than we predict, leading to a permanent loss of capital rather than a temporary decrease in the quoted price of a stock. The latter can often, but not always, be an opportune time to buy.
We focus intently on what we know and don’t know and think often about how to manage or avoid the common errors of psychological misjudgment. Being disciplined enough to stay within our circle of competence is critical to our success.
We determine the optimal size of our positions not only by the expected return but also by the range of potential outcomes. Estimating the range of outcomes is essential to intelligent investing.
We want the managers of our companies focused everyday on improving their competitive advantages. We want them digging their moats deeper and wider rather than focusing on gaming next quarter’s earnings or other irrelevant or counterproductive metrics.
We will hold cash in the absence of attractive equity investments that have an appropriate margin of safety. We feel it is our obligation to wait patiently when compelling opportunities do not exist.