1. GLOBAL LONG-ONLY EQUITY
Why Global? We seek investment opportunities globally, leaving no stones unturned. As a contrarian investor, we believe geopolitical and regional conflicts that drive down share prices to irrational levels can create attractive windows of opportunities. A global portfolio lowers portfolio correlation thereby reducing overall risks. Why Long-Only? Prices of long positions will always, in the long run, move according to fundamentals. Short-selling to generate alpha or hedge market risks is highly complex and introduces additional risks that are difficult to mitigate e.g. timing risks, short squeeze risks, regulatory risks etc. Long/short strategies also require frequent rebalancing which increases friction cost and reduces overall return. Why Equities? Equities will outperform any other asset class in the long run. The public equity market is a more level playing field with higher liquidity.
We focus only on the highest quality businesses whose competitive advantages are difficult to replicate, whose competitive advantages are difficult to replicate, can sustain a high return on invested capital, do not depend on excessive leverage to generate returns, are led by exemplary managers who are resilient to changing environments, and whose valuation is attractive. Because of our ultra-selective approach, we typically hold a concentrated portfolio.
3. CAPITAL PRESERVATION
We put great emphasis on margin of safety and the balancing of our positions to limit vulnerability to downside risks. The goal is to preserve investors' capital while maximizing risk-adjusted returns.
4. MINIMAL LEVERAGE
A minimal leverage approach provides stronger holding power and the ability to take advantage of long-term opportunities without the risk of forced liquidation at the time of market pessimism or as a result of short-term fluctuations. We only seek to utilize leverage during special cases where strong margin of safety is present. For most of the time, our funds are not leveraged.