Our Global and International Equity strategies reflect our philosophy of providing superior long term portfolio results by implementing a research driven approach and continually improving our process.
By focusing on the intrinsic value of the businesses and industries they operate in, we search for opportunities where the market is pricing the business at a level that is less than the intrinsic value we place on the business. Ideally, the difference between the intrinsic value and the asking price in the market is wide enough to create a comfortable margin of safety to resist any negative surprises and, conversely, to magnify any positive surprises.
We believe that equity investment returns are a function of expected future earnings and free cash flows; their growth; and the valuation multiples being assigned by the market
We search for companies whose current situation is misunderstood, underappreciated, or out of favor due to temporary factors which will leave no lasting damage to their business in the long term. We also search for managements who have long proven track records of building wealth for their shareholders through downturn resistant operations, good corporate governance practices, shareholder friendly reporting, and corporate actions.
The businesses with the highest and most stable demand, with the highest barriers to entry, and low capital requirements tend to carry the best investment characteristics such as the highest pricing power, highest profit margins, and return on equity.
An investment position with a good entry point that can protect these characteristics for a long time will produce a good long term return on the investment. This type of investment has inherent resistance to capital eroding factors such as competition, inflation, and over levered balance sheets. On the other hand, demand stability makes the business’s future cash flows more predictable, and more predictable cash flows allow the business to assume higher risk in acquisitions and other maneuvers not related to the day-to-day operation since the risk of the uncertain future is relatively lower. Our ideal target companies would have well protected, highly profitable, and predictable business operations in the foreseeable future.