Risk Management

Risk = The degree of uncertainty regarding the durability of a business’ earning power

KAR’s investment approach identifies the highest quality companies with competitive advantages and with little individual business risk. We believe, and our results have shown, that a high conviction portfolio of these companies which maintain strong market positions and little to no debt will experience less market risk than a traditional portfolio, provided that they are purchased at attractive prices.

Think: The Case for Quality
Investing in high-quality businesses

Risk Management Guidelines

Investment Philosophy

Focus on “high-quality” companies

Company’s ”business risk” is primary risk control factor

Portfolio Level Controls

Fully diversified portfolio by sector and country (if applicable)

Individual security weights initiated at 1% to 5% of portfolio

Position Reviews

”Position Review” report when a portfolio holding declines 20% absent a broad market decline

Re-validate reasons for original purchase or sell position

Trading Guidelines

Guidelines provided by Portfolio Managers when entering and exiting portfolio holdings.

Limit on trading activities as a percentage of daily trading volume, typically no more than 20%