Stock markets are renowned for their manic volatility, often subjecting inexperienced investors to an emotional rollercoaster as sentiment swings between greed and fear. In such an unpredictable, uncertain, and highly competitive environment, how do we achieve superior performance?

Most investors react to news headlines, chasing perceived informational edges, trading for short-term gains, and buying into recent hot trends and popular shares. In contrast, we do not anchor ourselves to such strategies, nor are we swayed by hyperbolic discounting. 

Our mandate is to invest permanent and patient capital in the highest-quality businesses at attractive valuations and hold them as long as they continue to execute effectively.

                                                                                     __________

Our process begins with inverse thinking, where we first ask ourselves what we want to avoid. Out of more than 68,000 listed companies worldwide, we’ve eliminated over 99.998%. This rigorous filtering leaves us with fewer than 100 securities that constitute our “investable universe” of high-quality businesses.

These select businesses meet the following stringent criteria:

• Durable Competitive Advantage: They possess strong “moats” that protect their high returns on capital from competition.
• Inelastic Demand & Unreplicability: They benefit from products that are essential or mission-critical, leading to inelastic demand. These products are often uncloneable by competitors.
• Dominant Niche Position: They operate in what we consider the most sound industries and hold a dominant position within their niche.
• Consistent Profitability: They achieve consistently high returns on capital and demonstrate advantageous conversion of accrual profits into cash profits.
• Pricing Power & Secular Growth: They exhibit clear pricing power and satisfactory volume output driven by a secular growth story, offering a long runway of reinvestment opportunities.
• Healthy Balance Sheet: They maintain robust balance sheets and do not require significant leverage to achieve high returns on capital.
• Thoughtful Capital Allocation: Management has a proven track record of allocating free cash flow in a thoughtful, long-term oriented, disciplined, and opportunistic manner.
• Aligned Management: Management demonstrates transparency, integrity, and strong alignment of interests with shareholders through meaningful “skin in the game” and fair compensation.
• Resilience or Antifragility: These businesses are either resilient to change or happen to be antifragile (gain from disorder) to technological innovation, often acting as industry disruptors themselves.
• Non-Cyclical Industries: They operate in non-cyclical industries or are less sensitive to macroeconomic forces and geopolitical events.

                                                                                      __________

Despite the minute-by-minute trading on public exchanges, we approach every investment not from a trader’s or investor’s mindset, but as private business owners. Additionally, we exercise our behavioural and psychological edge, enabling us to invest in quality businesses precisely when they are out of favour on Wall Street.

Interested in investing alongside us in the stock market?

We keep things simple. We do not engage in trading, shorting, speculating via derivatives, predicting macro events, hedging, chasing fads, or any other activity we consider nonsensical. As Albert Einstein wisely stated, “Make everything as simple as possible, but not simpler.”

We have meaningful net worth exposure in our carefully curated investable universe of high-quality businesses. Get in contact and start a co-investment partnership with us.