Our investment process seeks to protect against the risk of permanent capital loss

Risk Management

We view risk as the possibility of permanent capital loss. We look for competitively entrenched, well-managed, publicly traded businesses selling at discounted prices to help drive our goal of generating superior long-term absolute returns and minimizing the risk of permanent capital loss.

Risk Management Process

Step 1

Security Selection

Managing against the potential for permanent capital loss is deeply embedded in our investment approach, beginning with our bottom-up investment criteria.

  • High quality, financially sound, competitively advantaged Businesses
  • Capable, shareholder-oriented People
  • Discounted Price trading at 60% or less of intrinsic value

Step 2

Portfolio Construction

Portfolio construction is 100% bottom-up and benchmark agnostic, with strict portfolio guidelines.

  • 15-25 best ideas
  • 5% target position; ~6.5% max
  • 15% max industry target
  • ~10-15% max company ownership
  • Hold cash when securities do not qualify

Step 3

Ongoing Monitoring

We actively monitor our portfolios to manage risk at both the individual stock and portfolio level.

  • Add/trim positions to improve margin of safety
  • Continually update appraisal values and business cases
  • Devil’s advocate case review if price declines over 18 months
  • Ensure compliance with portfolio limits and guidelines
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