Our origins

There is a tendency of people in finance to overcomplicate things. Our approach is the opposite of this: from our structure, to our strategy, to our process. We believe that there is a strong correlation between complexity and errors, and thus strive to keep things simple. Furthermore, we do not think differentiated insight is possible on every company/industry. For this reason, we stay away from things we don’t understand and aren’t comfortable with, instead focusing on a limited number of areas.

There's a gradual bifurcation in our industry, with mainly two types of strategies remaining. On the one hand, there are quantitative approaches: mechanistic, automated, and diversified. On the other hand, there are truly qualitative approaches: business-like, long term, concentrated and research intensive. As qualitative investors, we are closer to the business models and products of companies than we are to power point presentations, quantitative models or financial conferences.

Exceptional stock price performance comes from exceptional per share compounding of business value. Exceptional compounding of business value is driven by growing cash flows, which comes from having attractive opportunities to reinvest capital at high rates of return over the long term - when cash earns more cash, which itself earns more cash. There are three sources of this: attractive products/markets/segments for growth, competitive differentiation, and superior management capital allocation. This process takes time, and we prefer not to interrupt it unnecessarily.