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Investment Methodology
- Our investment methodology involves
finding quality, well-managed companies that we believe have
a dominant or unique competitive advantage. We invest in these companies until their fundamentals
change. We are business owner’s not stock traders.
- We define intrinsic value as the fundamental
value that is justified by assets, earnings, dividends and future
prospects of the company. Management’s
role is also a key factor in determining the intrinsic value of
a company.
- We are contrarian when investing. We believe that the market
is not always efficient or rational and that short-term news often
disguises the long-term prospects of the business. Many companies
are “out of favour” and misunderstood and, as a result, stocks
of these companies trade below their long-term intrinsic value.
- We are opportunistic when investing. We
invest primarily in companies that trade at significant discounts
to our assessment of their intrinsic value.
- We believe in quality diversification
and not in ad-hoc over-diversification. We
avoid the “law of large numbers” which refers to the notion that
the greater number of assets that a portfolio holds the greater
the likelihood that it will achieve only a “normal distribution”
or an “average” result. We hold on average 30 to 35 specifically
analyzed and diversified investments in the Equity Portfolio and
between 12 to 17 investments in the Fixed Income Portfolio in an
effort to achieve “above average” results.
- We are disciplined when investing. Generally,
we take ownership interests in companies over a minimum three-year
“buy and hold” investment horizon.
- We gain an independent market perspective
by utilizing our own in-house research. Our proprietary research model allows
us to analyze ten years of past financial company data and project
the next five years. This model is based on a dividend discount
model that also adjusts for non-dividend paying stocks thus allowing
us to compare companies in an efficient and equal manner.
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