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Strategy and Investment Approach
We believe that carefully selecting a portfolio of assets with a suitable margin of safety relative to their intrinsic value would help us achieve our aim of compounding wealth over time.
We seek to find an edge in the markets through our analysis of the long term horizon, in-depth understanding of all our investments, and adhering to our value investment principles.
We believe that equity investments should comprise the majority of our portfolio as the volatility of the equity asset class presents opportunities for enterprising value investors. However, in times where excessive optimism builds up, thus making other asset classes more attractive, we retain the flexibility to invest in other asset classes.
With one eye on the investment climate among the various asset classes, we build up our portfolio one asset at a time using a fundamental, bottom-up approach.
For equities, we constantly monitor and keep track of a large number of companies. We try to understand each potential company in depth and look for situations where there is significant mispricing between the price and intrinsic value. Some examples of mispricing could be due to lack of understanding of the business, special situations such as spin-offs and excessive pessimism. We identify equities where the mispricing results in the market price being at a significant discount to our appraised intrinsic value.
Once we identify significantly mispriced equities, we will build up a position based on the size of the discount and quality of business. Attention will also be paid to the liquidity of the equity and the potential for narrowing of the gap between the discount.
We will monitor diligently the stocks that we hold and seek to maintain a portfolio of equities diversified over various fundamental equity strategies and throughout the capitalisation spectrum.
When equity markets are overvalued, we will invest in other asset classes such as fixed income or cash, while waiting for better risk-reward investment opportunities to surface.
"We're not going to buy anything just to buy it. We will only buy something if we think
we're getting something attractive ...
You don't get paid for activity. You get paid for being right."
-- Warren Buffet