Valuation Models and Price Discipline
In contrast to valuation models relying on simple measures like P/E, our models focus on the value of being a long-term owner of a business, so they capture the value of long-term growth.
Value Trap Avoidance Businesses that don’t grow tend to be poor long-term investments. We employ a comprehensive set of web-based analytics to help us identify and avoid companies whose characteristics suggest they are structurally or managerially unsound, and therefore unlikely to grow.
Accounting and Earnings Quality Due Diligence
We evaluate the quality of the accounting and management integrity by reading 10-Ks, 10-Qs and other available information.
Diversification We diversify portfolios across industry groups, with initial position sizes of 2% to 4%.
The average number of positions in a portfolio is between 35 and 40. A position is trimmed if it reaches 6% (due to relative price appreciation).
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