The firm’s investment philosophy is based on the long-standing value-oriented investing principles originally taught by Benjamin Graham & David Dodd.
These principles are best described as viewing a security as a fractional ownership in the underlying business. This requires developing a thorough fundamental analysis of each business and its financial condition in order to establish an appraised or estimated value of the enterprise. Investments are made only when a sufficient margin exists between a stock’s quoted price and the analyst’s estimated value. This important part of value-oriented investment principle is referred to as a Margin of Safety, and accounts for the imprecision of market pricing and financial estimates.
We strive to invest in companies, not trade in and out of stocks. We seek to initiate investments which we believe have fallen out of favor with market participants, thus creating a temporarily undervalued investment opportunity. Our aim is to exploit inefficiencies we believe are inherent in the capital markets as a result of the misinterpretation of information. In our view, the increase in algorithmic trading and instantaneous decisions made based on superficial news flow has increased inefficiencies.
Our goal is to arbitrage discrepancies between price and value when these inefficiencies occur and create wide gaps between our appraised value and the last quoted stock price. We are patient, long-term investors willing to hold investments for years in order to maximize returns.