Investment Approach

Our primary investment objective is to provide our clients with a long-term, above-average real return after taxes. In pursuing this objective, we focus mainly on owning equities that are undervalued at the time of purchase, well-managed, have enduring competitive strengths, and have above-average growth potential. We view an investment in equities as an ownership interest in a business. We invest as long-term business owners rather than short-term traders. We conduct considerable in-house research. Our research focuses on appraising a company’s true earning power, financial strength, competitive position, management, and fundamental value.

Companies that fit our criteria are rare. Consequently, our portfolios hold a limited number of companies. Our preference is to invest in companies we plan to hold for many years. Once we invest in a company, we continually re-evaluate the company and its long-term prospects relative to its market price. In most years, portfolio turnover will be low.

While we normally invest in companies based in North America, we may also invest in companies from other countries. We will invest cash reserves in investment grade Government, corporate bonds and money market securities.
 
Certain aspects of our investment approach differ from many of the common conventions in the investment industry. Our approach is unique for not only what we do but also for what we DO NOT do:
 
  • equate the volatility of stock prices with risk; we define risk as the risk of permanent capital loss and/or the risk of not achieving a satisfactory long-term rate of return;
  • regularly pursue short-term trading profits;
  • give weight to technical stock market indicators;
  • make an attempt to benchmark any market index in terms of sector weightings or performance;
  • regularly use brokerage research; and
  • hedge our foreign currency exposure.