We Build Resilience
The primacy of risk control
Rule No. 1: Don’t lose money. Rule No. 2: Don’t forget Rule No. 1.
Risk is not volatility; risk is the permanent loss of capital. We focus on downside first, upside second.
How we apply it:
- We favor strong balance sheets, resilient cash flows, and prudent leverage.
- We avoid “story stocks” without durable fundamentals and structures with asymmetric downside.
- The cost of being wrong matters more than the size of being right.
Emphasis on consistency
We pursue a repeatable process, not one-off wins. Long-term outcomes come from discipline, not prediction.
How we apply it:
- Clear standards for business quality, valuation, and risk.
- Standardized analysis for comparability across companies.
- Preference for robust business models over fragile, highly cyclical outcomes.
Macro-forecasting is not critical to investing
We do not base decisions on predictions about rates, inflation, GDP, or macro scenarios. Macro is often noise; business quality and valuation are the signal.
How we apply it:
- Focus on micro fundamentals: competitive advantage, margins, capital efficiency.
- We treat macro as context, not the engine of our thesis.
Disavowal of market timing
No one consistently picks tops and bottoms. Time in the market is more important than timing the market.
How we apply it:
We avoid impulsive decisions driven by headlines or short-term price moves.
We buy when we have a margin of safety and a clear thesis.
We hold while the thesis remains intact and the business quality persists.
Buy a business, not a stock
If you wouldn’t own the business for 10 years, don’t own the stock for 10 minutes
How we apply it:
We seek demonstrable advantages, not marketing narratives..
We think like owners.
We assess earnings durability and the role of capital in the model.
Price matters
We prefer a great business at a fair price over a mediocre business at a great price. Valuation is part of risk.
How we apply it:
We pass on opportunities that look “good” but are not sufficiently attractive relative to risk.
We require a margin of safety.
Long-term horizon
Time and compounding are core. We invest so quality has time to express itself
How we apply it:
Focus on durable growth, reinvestment, and capital discipline.
We avoid unnecessary turnover driven by noise.
High-quality management
We back leaders who are honest, rational, and shareholder-oriented. Bad management can destroy even a great business.
How we apply it:
- We evaluate capital allocation: buybacks, dividends, M&A, reinvestment.
- We value transparency, accountability, and meaningful alignment (“skin in the game”).
Economic moat
We favor businesses with structural advantages: brand, network effects, regulatory barriers, scale, and customer habits.
How we apply it:
- We look for evidence in margins, customer retention, and pricing power.
- We assess how difficult it is for competitors to replicate the model.
Understand what you own (Circle of Competence)
You don’t need to know everything. You need to know what you don’t know.
How we apply it:
- We invest only where we can explain the drivers and risks in plain language.
- If we cannot model the downside, we do not invest.
Concentration over diversification for its own sake
Diversification is a tool for managing the unknown. When conviction is high and the margin of safety is compelling, concentration is rational.
How we apply it:
- Fewer positions, deeper research.
- Position sizing reflects thesis quality and downside risk.
