Our Approach

The Principles We Pursue

“It is a mistake to think one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.”

— John Maynard Keynes

Overview

Unlike a more traditional approach in which a portfolio is diversified broadly across 75-100 stocks to minimize the impact of individual positions, KAR takes a more selective approach. Guided by deep fundamental research and a focus on business quality, we build high-conviction portfolios of just 25 to 50 high-quality securities.

Our Core Principles
Quality Over Quantity

Our portfolios reflect our highest conviction ideas, typically holding 25-50 positions. This focused approach allows us to dedicate significant time and resources to understanding each investment deeply.

Long-Term Horizon

Our investment approach is designed for the long term. Because we invest with high conviction, we typically hold positions for three-to-five years or more.

Mitigating Risk Through Quality

We reduce risk by investing in the highest-quality companies, rather than trying to diversify it away through a larger number of holdings.

Our Approach

Our goal is to own a limited number of what we believe are the best businesses, and to hold those companies over the long-term.

FeatureKAR Approach*Classic Approach†
Portfolio Size25-50 positions75-100 positions
Position Sizing3% to 10% in high-quality companies1% to 2% in average companies
Individual Company RiskEach company exhibits minimal business, balance sheet, & profit riskNo single stock typically impacts the portfolio
Average Holding Period36-60 months6 months
The KAR Difference

We would rather own a smaller number of exceptional businesses that we understand thoroughly than a large number of companies we know superficially. This philosophy drives us to be selective and patient, waiting for the right opportunities to deploy capital at attractive valuations.

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