Investment Principles
Our investment philosophy is based on four unchanging investment principles.
First, our decisions are formed primarily by the long term. Aligning capital with long-term opportunities maximizes the power of compounding and reduces costs.
Second, we do not depend on formulas, models or styles. We practice fundamental security analysis using our own proprietary research. There are no shortcuts to understanding the fundamentals of companies, industries and the economic environment. We apply judgment and refuse to restrict ourselves to large or small companies, growth businesses or "value" stocks. While using traditional yardsticks, we think it is important to value securities using methodologies that business owners use to undertake purchase or sale transactions in their respective industries. Our experience has taught us that outstanding financial machines may be found in places outside conventional pigeonholes. The character of our portfolios evolves with the market opportunity.
Third, we think globally. It matters less where a company is domiciled than where it does business, how it does business and who the management team is. Global reach can protect capital from the volatility of one market while allowing portfolios to pursue the best investment ideas around the world.
Fourth, we are "theme" investors. We emphasize holdings in companies that are beneficiaries of the dominant economic and social forces of each (roughly) decade-long cycle that drive industrial change. This focus on the "rising economic tide" means we're looking for businesses that have the wind at their back as evidenced by strong organic growth rates and rising return on capital.