Personal Investment Style

We have clear thoughts about the investment process.  We have developed our views from working in diverse roles, such as leveraged buyout lending, early stage venture capital, executive management and law.  We explain the primary elements of our style.   

We are downside focused.  We want to acquire good businesses that have a demonstrated ability to make money over the economic cycle.  We prefer businesses with good market growth rates, attractive industry structures and meaningful sources of competitive advantage.  We capitalize businesses conservatively so they can comfortably handle adverse shocks and have the financial wherewithal to make opportunistic investments. 

We take calculated bets.  Unless we can improve their economic fundamentals over the primary assumptions implied in the purchase price, we aren’t interested in the business.  So we evaluate closely the latent assets of the business and make a determination about our likelihood of realizing their value within our investment timeframe.    

We act with a long-term mindset.  This gives us more latitude in making business decisions, and hence, accentuates the advantages of an exceptional management team.  In addition, it allows us to exploit competitors that operate under a shorter timeframe.  Finally, it allows us to take advantage of the laws of compounding.  The combined effect is that we have greater control over the eventual outcome for shareholders.

We employ a systematic process.  Whenever possible, in our fact-based decision-making process, we develop a clear profile of the major risk and return factors in advance of making a decision.  We use primary and secondary sources of information to research topics.  For example, we interview major customers to evaluate the likelihood of maintaining the current level of business in the future.  Because we have considerable experience in conducting this process and are only interested in businesses that we understand, we are confident in our ability to perform this analysis competently.      

We are realistic in our expectations.  We have learned from making innumerable mistakes that we can't expect to be 100% right with every decision.  Our humility is reflected in our conservatism.  However, we believe that by adhering to our systematic process that we will make the right decision more times than not, and the result will be a consistently favorable outcome for our shareholders.

Because we have significant experience in employing our style and are always looking for ways to improve, we are confident in our ability to manage the investment process successfully.