Philosophy & Process

Our Philosophy

AS TRADITIONAL VALUE INVESTORS, WE BELIEVE THAT:

Focusing on high quality companies that are undervalued for transitory reasons can lead to above average returns.

Temporarily out of favor (neglected) industries are fertile ground for finding appealing long-term investment opportunities.

Risk-adjusted performance can be enhanced by emphasizing stocks which exhibit the best risk/reward relationship (limited downside risk with meaningful upside potential).

Risk Management

STOCK SPECIFIC RISK MANAGEMENT

We carefully assess risk at the stock level in several different ways.

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STOCK SPECIFIC RISK MANAGEMENT

To minimize stock specific risk, we:

Determine if a company's issue is secular or transitory
>> We seek to invest in stocks that are undervalued for transitory reasons.

Assess a stock's potential range of outcomes
>> We typically will hold larger weights in narrow range of outcome stocks, and small weights in wider range of outcome (riskier) stocks.

Emphasize the key factors that may provide downside protection including:
>> Net cash on balance sheet
>> Hard Asset or Hidden Asset Value
>> Dividend

Build our positions in stages
>> We scale into and out of stocks as they become more or less attractive based on valuation and/or fundamentals.
>> We do not add to positions greater than 5%.

TOP DOWN PORTFOLIO CONSTRUCTION

We adhere to guidelines that ensure portfolio diversification and style purity.