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Company Philosophy
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Investment philosophy is often taken for granted but it is a very important aspect since it is the foundation of all of our investing actions. Many money managers do not perform as well as they should mainly because they do not believe in the correct ideas that would bring success. We believe that it's important for you to understand how we think so you can understand how we invest your money and ours. Below is a general view of how we look at future investments.


The most important principle in deciding if a company should be bought, is to understand how much the company is actually worth. How else can you decide if the investment is truly and investment if you don't understand how the current price relates to what the actual price should be? In order to price a company we use extensive fundamental research and view the business as if we were a private buyer by valuing its future cash flow streams and by searching for overlooked or underestimated assets and liabilities. We then research the current and future marketplace, the company's future competitive abilities and their competitors. Past growth is no indicator of future growth without an understanding of how the market place will change. Once we arrive at a fair price or find its intrinsic value we only invest at a significant discount to that price. Underpaying for what others will pay for in the future allows us a margin of safety in case of unfortunate surprises, allows us to get into a wonderful company at a wonderful price and allows us to achieve superior returns compared to the overall market. Finding these situations are rare but worth the search. Sometimes investors overlook specific industries because some become very popular or don't fully appreciate the potential of others. In any case this is what we look for and why.

This style of investing tends to have attributes that gives us an edge at beating market averages and other portfolio managers. Because a company is viewed from its future fundamentals a longer time horizon is implied and generally results in low portfolio turnover. Low turnover has several advantages, first commissions will be lower since fewer transactions are being placed and long term capital gains taxes will be paid which are significantly lower than short term. These reduced costs can make a large difference in the long term. Even an extra few percentage points per year by efficient portfolio management will have apparent effects to your investment.

We believe this is the correct investment philosophy to have and because of that we look forward to earn above market returns in the future.

 

   
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