Stock markets are well known for their manic volatility which gives inexperienced investors an emotional rollercoaster, as their internal pendulum consistently swings from greed to fear.

How do we outperform in such an unpredictable, uncertain, and highly competitive environment?

Most investors react to news headlines and chase a perceived informational edge, they trade for short-term gains, buy recent hot trends, and the most popular shares. On the other hand, we don’t anchor ourselves on such strategies and aren’t enticed by hyperbolic discounting.

Our mandate is to invest permanent and patient capital, in the highest-quality businesses at attractive valuations.

In our process; we start with inverse thinking and ask ourselves what do we want to avoid?

Out of more than 40,000 listed companies worldwide, we have eliminated over 99.98%. We are left with less than 100 securities that we regard as our “investable universe” of high-quality businesses.

They meet the following criteria:

  • businesses that are profitable, achieve a consistently high return on capital employed & possess advantageous cash conversation
  • businesses that don’t require significant amounts of leverage to achieve a high return on capital & maintain healthy interest cover
  • businesses that possess a durable competitive advantage that protects their high returns on capital from the competition
  • businesses with evident pricing power that increase revenue consistently over the long run without losing their customer base
  • businesses that make money from everyday, repeated, recurring, predictable, nondurable transactions (even during downturns)
  • businesses that operate in non-cyclical industries or happen to be less sensitive to macroeconomic forces & geopolitical events
  • businesses that benefit from barriers to entry, deterring the competition from cloning their strategy, even if they have deep pockets
  • management’s track record of allocating free cash to attractive reinvestment opportunities due to superior market or industry growth
  • management with transparency, integrity & alignment of interests with shareholders via meaningful “skin in the game”
  • businesses that are resilient to change, perhaps even antifragile, particularly from technology innovation and industry disruptions

Despite the fact these businesses trade on public exchanges minute by minute, we approach every investment — not from a trader’s or investor’s mindset — but as private business owners. This mindset gives us a behavioural & psychological edge to invest in quality businesses, even when they happen to be out of favour with Wall Street.

Interested in investing alongside us in the stock market?

We keep things very simple. We won’t engage in trading, shorting, speculating via derivatives, predicting macro events, hedging, or any other action we regard as nonsense. 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.