We seek companies with business models that offer enduring competitive protections and control over their markets.
We apply rigorous, bottom-up research to deeply understand each company, connecting qualitative insights with quantitative results.
We determine a price range based on long-run economic earning power, targeting acceptable expected total returns over a multi-year period. We assess the valuation on an absolute basis and relative to other opportunities.
Qualitative Analysis
We seek companies with sustainable competitive barriers and disciplined management teams that focus on core competencies, reinforce competitive advantages, and allocate capital responsibly.
We do this by:
Reviewing regulatory filings, company materials, industry data, and third-party research.
Conducting comprehensive interviews with management and speaking directly with customers, competitors, and other industry participants.
Understanding the basis of competition within the industry.
Assessing competitive threats and obsolescence risk: What protects the business?
Quantitative Analysis
Balance Sheet: We seek businesses with high intellectual capital and low physical capital, often translating to low debt and robust free cash flow.
Income Statement: We favor companies with lower overall fixed costs, which contributes to more durable and stable earnings.
Cash Flow Statement: We look for companies with abundant cash generation so significant capital investment is not required to fund operations and growth which increases management’s ability to focus on shareholders.
