One Unifying Philosophy
Concentrated, long-term investing, combined with a focus on intrinsic business value growth, is the core of our time-tested investment philosophy.
We believe that superior risk-adjusted returns can be achieved by investing in concentrated, conviction-weighted portfolios of companies that have steady, stable business models and opportunities to generate consistent, long-term growth of intrinsic business value. This tenet drives our analysis of the risk/reward profile of every company we consider for our portfolios.
When evaluating a company, we emphasize its intrinsic business value, meaning its returns on invested capital and its ability to generate free cash flow. We believe the companies chosen for our portfolios will have a clear, sustainable competitive advantage, unique secular opportunities, and an exceptional management team, dedicated to creating shareholder value. We look to create differentiated portfolios with exposure to both secular and idiosyncratic growth drivers.
With a long-term focus, we generally look to hold our investments for three-to-five years or more.
One Thoughtful Process
Because our investment team members are generalists, they are charged with finding the most attractive companies in the marketplace, irrespective of sector, industry or geography. Idea generation is organic, rather than filter-driven, often originating from a change or catalyst within a company or sector.
The team takes a bottom-up approach to our fundamental research. We construct a ten-year discounted cash flow model. We immerse ourselves in all relevant information to build an original comprehensive thesis on a potential investment.
Company-specific research and portfolio construction considerations for each of our investment strategies are discussed regularly with the entire investment team. Ideas are presented to the group for vetting and deliberation, a vibrant example of our firm’s ‘culture of debate.’ Our portfolios are built to be benchmark-agnostic, with weightings determined by a careful assessment of risk and reward.
We believe strongly that the depth of our understanding of each company we hold differentiates our firm from other investment managers.
ESG in Focus
Environmental, Social, and Governance factors fit within our framework for the pricing of both positive and negative externalities, an integral part of our investment philosophy. We apply a principles-based approach to evaluate ESG factors that materially impact business fundamentals and cost of capital.
Our key principles are:
Environmental: a company should seek to minimize the carbon footprint and other ecological impacts of both its own business and that of its industry
Social: best-in-class labor practices and a positive public and industry reputation are key for attracting top talent and therefore key for growth and competitive moat
Governance: management teams should have incentives aligned with investors over the medium and long term
We proactively identify material inflections in growth or returns for companies which are driven by ESG-related changes. We also overlay ESG issues to better assess sustainable competitive advantage.
We collaborate with organizations that enhance our perspective and understanding of sustainable investing.
SASB Alliance Organizational Member