1.Partnership
We think of ourselves as being in a two-way partnership with our investors.
Our Principles
These are the principles by which we invest, and by which we ask to be judged.
2.Long-term capital growth
Our goal is to grow our capital over the long term, with the informal aim of doubling our capital every 5–6 years on average.
3.Quality
We will pursue this aim by purchasing future cash flows for less than they are worth in today’s money. We will do this by buying ownership interests in quality businesses, run by excellent management teams, at attractive prices. By adopting this approach, we will necessarily treat the buying of shares as if we were buying the whole business. We will look to the performance of the business for signals of its success or failure and not to the price attributed to the business by the market.
4.Value driven
We will only buy something if we are confident that we can make a sensible estimate of the business’s intrinsic value and we can buy the business for considerably less than that estimate. By intrinsic value we mean the present value of the future cash flows produced by a business to a rational and knowledgeable buyer.
5.Independent thinking
The impact of mass psychology on the market means that the intrinsic value of an asset or business often differs from the price of the asset or business in the market. This is particularly the case during moments of panic or euphoria. We will seek to make our profits by taking advantage of this difference.
6.Margin of safety
Our default position will be cash. We will only move from cash into an investment when we are confident that we have a sufficient margin of safety between our purchase price and a conservative valuation of the business, as well as the prospect of an outsized return. This means that in certain market conditions, we may appear rather inactive. This is no bad thing in investing. The urge to do something just to be active can be very costly. If you chase returns, you almost never catch them.
7.Transparency
Our performance should be judged over periods of many years. Any out-performance or under-performance month-to-month and even year-to-year should not be taken too seriously. We will write to you at the end of each 6-month period to update you on the performance of the portfolio as well as to let you have any other information which we would like to receive if we were in your position.
8.Alignment
Finally, and perhaps most importantly, we cannot promise results, but we can promise that our interests will be aligned with yours. The majority of our personal wealth, and that of our extended families, will be invested alongside yours; we will only prosper if all our partners prosper.
Contact us for more information.