The average investor’s get-rich-quick mentality and stock-picking overconfidence causes them to gravitate towards riskier stocks, whereas high-quality stocks tend to be left behind and perpetually underpriced relative to their dominance and predictability. We, therefore, primarily invest in global champions with enduring pricing power and long-term volume growth opportunities that are managed by ownership-minded teams and conservatively capitalized.
- deeply entrenched in the economic system
globally-networked brand or service
geographically-diverse revenue streams
high market share
- Earn sustainable and predictable high returns on tangible assets
- Difficult to replicate competitive advantages make it immune to disruption
- Utilizing our framework*, we assess ability to overcome deflationary pricing that comes as a result of competition and innovation
In a technologically deflationary world, where constant disruption is causing everything to be made better, faster, and cheaper, we focus on the very few, rare businesses that possess enduring pricing power and can continue to earn sustainable high returns on tangible assets.
* Please see a more detailed explanation of our investment strategy here.
- long runway of reinvestment at high rates of return
- benefits from the growth in the global middle and upper classes
- benefits from urbanization
- pricing power combined with volume growth means they will be indexed to GDP growth or better
- high family, founder, or other insider ownership
- history of treating minority owners fairly
- history of wise capital allocation decisions
- proven track record of ignoring short-term Wall Street pressures
- focus on aligning employee incentives with owners (principal-agent problem)
- can survive or even thrive in a deep recession
- possess financial flexibility to fend off new and existing competitors
After winnowing the investment universe down to these dominant global champions, we seek attractive valuations as determined by our estimate of risk-adjusted forward rates of returns. Oftentimes the best investment opportunities are found when investors are over-discounting temporary macroeconomic or operational issues. Then, we construct a portfolio we believe will be robust against various economic outcomes. We intend to benefit from the superior economics of these businesses by owning them for years to come.
This approach has served us well over the years, and we believe it will continue to do so in the future. As such, we will be invested right alongside you.
To read our white paper on why we believe equities (stocks) is the superior asset class click here.
To read our white paper on our detailed investment strategy, click here.
To read up more on our global champions, click here.
While we primarily invest in equities (stocks), we also create customized portfolios with clients that include cash and bonds depending on a client’s particular financial objectives and risk tolerances. Contact us directly to learn more.