Our Investment Strategy

Our investment strategy was developed to maximize our long-term potential upside while limiting the risk of permanent capital loss.

To consistently execute our strategy, we have built a documented and proprietary bottom-up investment approach which relies on our investment framework’s North Star, based on five fundamental elements.

People:

• Companies led by a management with owner-operator characteristics.
• Corporate culture aligned with the business model and competitive advantage of the company.

Business:

• Businesses with a self-reinforcing business model over the long term.
• Organizations who operate within a positive and sustainable ecosystem – benefiting all participants.

Sector:

• Position of dominant sector leadership, whether in a niche or broader market.
• Sectors benefiting from a certain tailwind – no sunset industries.

Reinvestment:

• People make capital allocation decisions, businesses generate cash flows, and sectors lead to opportunities. When present in quantity and/or quality, these three fundamental elements allow for strong reinvestment.
• Increasing return on investment, coupled with strong revenue growth represent a powerful combo.

Valuation:

• Fair price or lower is what we are looking to pay for a business. We aim to be directionally right in our estimates (instead of precisely wrong).

 

Ultimately, our investment strategy results in a high-conviction portfolio of 12-15 long-term holdings, on which we are highly knowledgeable and stay close to during the whole ownership period.

 

“Investment is most intelligent when it is most business-like” – Benjamin Graham

 

Research Process

Idea generation is where it all starts. Our overall attitude in terms of idea generation is to stay curious and not discriminate against the source of the ideas. At this initial stage, our process is based on a certain level of guided serendipity. We aim to eliminate new ideas fast, avoid hot stocks, and keep our trigger-ready list up to date.

Our research process is aligned with our long-term focus and is therefore highly demanding. We try to understand the opportunity for the next decade, which implies focusing on evaluating fundamental elements that will make a difference in the long run. We also aim to stay aware of and reduce our biases as much as possible.