Process

OUR MISSION

Deliver superior risk adjusted returns through the market cycle via a disciplined pursuit of high company quality and an attractive price.

We believe that a sound investment philosophy should begin with a goal of being price sensitive buyers of high-quality assets.

 

QUALITY

Company-specific attributes such as high relative profitability, durable free cash flow generation, a defensible margin/return profile, and low leverage are viewed as critical inputs to delivering excess return over a full market cycle.

PRICE

Price sensitivity at attachment is the most critical determinant of both forward return potential and downside risk.

DISCIPLINE

Strict adherence to a well-defined stock underwriting process and a robust portfolio construction framework.

SEEK STRONG COMPANY INTERNALS:

  • Durable franchise position
  • Above average: margins, return on invested capital, free cash flow generation
  • Below average: leverage, cash flow variability
  • Track record of strong capital discipline, corporate governance

ADHERE TO GUIDING PRICE PRINCIPLES: 

  • Price sensitivity at entry is critical
  • Valuation can provide downside protection
  • Incoming positions should possess a potential 3:1 up/down return profile
  • Quality must not be sacrificed to achieve low aggregate valuation
  • Follow stringent equity underwriting process
  • Exercise patience to reach desired attachment point
  • Be prepared to act when high-quality companies go on sale
  • Quality and price must align

SEEK FAVORABLE INDUSTRY EXTERNALS:

  • Rational industry structure
  • Expanding or fully penetrated addressable market

DETERMINE THE RIGHT PRICE: 

  • Seek attachment at attractive price relative to business value
  • Utilize multiple industry appropriate valuation measures

Value is a function of the price we pay relative to the combined attributes we receive in return.