INFORMATION GATHERING AND ASSIMILATION

• We review all relevant filings and disclosures, and have informal discussions with managers, competitors, customers and suppliers.
• We add value through our longstanding relationships with companies.
• Our Portfolio Managers are skilled and proven in “connecting the dots”.

EFFICIENT DECISION MAKING

• We believe strongly that accountable individuals and or very small teams make the best investment decisions.
• Our streamlined process avoids the “lowest common denominator” decisions frequently produced by investment committees.
• We believe popularity is usually inversely correlated with future returns (although it sometimes feels lonely not to own such “popular” positions).

TARGET PRICES

• Each security in the portfolio has a one-year target price (TP) attached to it. 
• Each TP takes into account a base case, a stretch upside and a stretch downside.
• This exercise forces us to think hard about these different scenarios. To arrive at the target price, we consider the likelihood of each scenario and weight them accordingly. 
• The process is fluid, e.g., target prices will change as a function of the overall market.

RISK MANAGEMENT

• We define risk as the possibility of losing capital, not as a security’s deviation from any particular benchmark.
• Value investing is inherently risk averse, with attractive valuations representing the “margin of safety”.
• We occasionally use cash as a risk management tool, as circumstances warrant.

SELL DISCIPLINE: WHEN TO SELL?

• Stock reaches TP.
• A more compelling opportunity emerges.
• Thesis is invalidated.