Investment Philosophy
Our objective is to provide a means for our clients that will help them achieve financial freedom and accomplish their lifelong goals. To achieve this objective we are long-term investors and seek to achieve the highest possible returns with relatively minimal risk of a permanent loss of capital.
Our conservative approach focuses on downside protection. Rather than using volatility as a measure of risk, we view risk as a permanent loss of capital. This may come in the form of a poor investment where there is a loss never to be recouped, or through a loss of purchasing power caused by returns less than the rate of inflation, or through a forced liquidity event causing the sale of positions into cash at an unfavorable time.
We are opportunists, meaning we seek the best values for our clients wherever they may be found within our circle of competence. We remain flexible to all investment opportunities that are presented globally in all asset classes.
When evaluating any investment, the returns will be based upon the future cash flows generated. Thus, we place a strong emphasis on cash and we seek answers to four basic questions:
- How much cash are you receiving?
- What are you paying for that cash?
- When are you receiving that cash?
- How predictable or risky is that cash?
With this emphasis on cash, we analyze individual businesses, relying upon our in-house fundamental research. Our investment strategy could be described with three "P"s: Price, Product, and People. To aid in explaining, we developed an icon of three stones of Chrysolite*. The ideal investment would include all three "P"s, however, we are flexible if the risk reward ratio is sufficient.
Once we have determined the companies in which we would like to become business owners, we may also enhance the portfolios through two basic strategies: option enhancement and hedging.
*Note: We chose Chrysolite as the symbol because it is mythically believed to provide protection, promote sleep, and help dreams come true through wealth attraction. The greenish color of Chrysolite is said to symbolize growth, money, eternal life, family, harmony, good luck, youth, vigor, healing. In addition, green can indicate the presence of water, mitigating the risks of famine which prevents anxiety and instead promotes rest and relaxation.