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Portfolio Strategy

We practice the investment strategy of selecting stocks that trade less than their intrinsic values. A fundamental part of our investment is to ensure that there is a margin of safety with our investments. This margin of safety allows investments to be made with minimal downside risk.

Value Investing

  • We make a long-term investment in a company with durable competitive advantages when the market price does not fully reflect its growth potential
  • We make a short-term investment in a company whose market price is significantly discounted to its intrinsic value and there exists catalyst for narrowing such a price gap

Focus Investing

  • On average, our concentrated portfolio contains 20 to 25 stocks; once we purchase a stock, we typically hold on to it for 6 months to 3 years
  • We believe that investing in a few well-selected companies provides sufficient diversification

Buy and Sell Decision

  • We buy only when there is a sufficient margin of safety
  • We sell when the market price appreciates sufficiently relative to the company’s intrinsic value
  • We sell when we find better investment opportunities

Target Companies

  • History has shown that, over time, the best way to protect and build capital is through the long-term ownership of outstanding business. We define an outstanding business as one that, at a minimum, meets the following criteria:
    - Understandable business model
    - Low-cost structure relative to other companies in the same industry
    - Predictable prospects over long-term
    - Strong financial position with little or no debt
    - Consistently growing cash flow
    - High returns on net invested capital
    - Effective, honest and shareholder-oriented management
  • We are interested in business that provide products or services that are essential to the customer and have few substitutes
  • As a rule, investing in a great business with mediocre management is safer that investing in a mediocre business with great management