We have a set of core beliefs that underlie our approach to investing:

Contrarian

We believe that markets are inefficient due to investors’ recurrent behavioural errors. Over the short term market participants frequently overreact to news, both to the downside and to the upside, which means that stock market valuations can significantly diverge from the intrinsic value of the underlying businesses. When negative news flow leads to excessively adverse sentiment and pushes securities below their fair value, the dislocation between price and value affords the contrarian investor opportunities to buy companies at attractive valuations.

Valuation-driven

Over the longer-term investors’ returns are overwhelmingly driven by the price they pay for their investments; cheap stocks outperform expensive stocks over the long run. We take a private business owner’s approach to valuing our public equity market investments; we always consider the enterprise value (EV) of the business where this is meaningfully calculable.

Disciplined

We conduct deep, fundamental analysis and consistently apply a rigorous and disciplined investment process. There are many investment approaches that can potentially add value, but none of them will do so unless they are applied in a disciplined and consistent manner. Our approach of opposing the received wisdom and going against the investment herd requires conviction, steadfastness and self-belief. We are not part-time contrarians.

 Patient

We are prepared to wait for attractive entry points and then to hold stocks for long periods; we are investors not speculators. We will wait for attractive entry points into our portfolio holdings as we will not compromise on the price that we pay; there must be substantial upside to our conservatively appraised estimate of fair value. Long holding periods will be typical, as recovery in the fundamentals of a business can unfold over many years, with the reversal in investor sentiment potentially taking even longer to play out. Whilst investor sentiment blows stocks away from their fair value in the short term, over the longer term the market will ultimately reflect their true worth and our patient approach allows us to profit from this ‘time arbitrage.’