Concentration – We aim to invest in a relatively small number of high quality securities including ETFs and Funds (with about 15 to 20 core positions at any one time). We aim to be concentrated enough in our best ideas so as not to dilute our overall returns but hold enough positions in order to provide an appropriate level of diversification. Concentrating capital in high quality businesses builds wealth.
Our strategy is to buy wonderful businesses for the long term in an effort to defer tax, minimise frictional costs and maximise our long term returns. If a business performs well, the stock price will eventually follow.
We aim to hold cash when we feel that no ‘margin of safety’ exists. By doing this we were able to protect our clients’ capital during one of the worst market collapses since the Great Depression.
We are often contrarian and strive to be fearful when others are greedy and greedy when others are fearful. To have better performance than the crowd, you must do things differently from the crowd.
We aim to selectively avoid companies and sectors that we have identified to be structurally weak and believe are vulnerable to material price declines.