Investment Objectives

Our goal is to generate satisfactory returns relative to the broad market index and protect our investor’s capital in volatile market conditions as measured over a long period of time. We seek to achieve these returns while protecting capitals from unfavorable market conditions by making investments based on verifiable facts instead of speculation, applying appropriate margins of safety to our valuation, and focusing on long-term outlook instead of short-term volatility. We expect our investors to have medium investment horizons of at least 3 years and be comfortable with a high variance in annual returns.

Research Process

Our strategy focuses mainly on public equity in the U.S. Although we generally operate under simple and sound principles, we strongly believe that the most value can be found in unpopular ideas. Thus, our strategy is contrarian.

While most investment funds hedge downside with shorting stock, buying put options, or pairs trading, we aim to achieve our conservative investment objectives through deep understanding of individual companies, applying margin of safety in our valuation, and appropriate diversification.

graph

Our investments can be classified into three broad categories:

Undervalued: This comprises public securities which are undervalued by the general market due to factors that we believe are temporary. We expect market correction of such securities will happen soon enough to produce satisfactory returns.

Buy-and-Hold: This comprises public securities that we accumulate over a long period of time at what we believe to be fair prices. Such securities include stocks that appear to us to be exceptional growth companies or those that generate long-term free cash flows with light capital expenditures. We intend to hold such investments through multiple market cycles.

Special Situations: This comprises public securities that we believe are mispriced due to time-bound conditions, which might include specific upcoming corporate events, pending government decisions, or some other natural events.

Our allocations among these categories will vary over time and depend on market conditions as well as the timing of available opportunities.