Investment Strategy
​Our firm employs a “growth at a reasonable cost” investment philosophy. Our funds identify companies with distinct competitive advantages in growing industries trading at attractive multiples. We believe it is worth paying a premium for industry leaders since the world is becoming a winner takes all economy. Furthermore, we employ index funds in certain industries which have “unskilled alpha,” a fancy term for an industry in which outperformance is impossible due to inherent unpredictability.
1
Competitive advantage
Our funds invest in companies with moats that are difficult for other companies to replicate. We value companies using different multiples depending on the strength of their moat. We rank the distinct types of competitive moats in the following order.
-
Network Effect
-
Brand Value
-
Technology advantage
-
Operating Scale
2
Attractive Valuation
Our funds identify companies that are trading at an attractive valuation. Most investors either cheap out and do not invest in quality companies or grossly overvalue them. Our investment strategy utilizes a combination of qualitative and quantitative variables to invest in quality companies with a reasonable margin of safety.
3
Industry Leader or Industry Disruptor
We believe that investing in industry leaders and industry disruptors is the easiest way to outperform. These companies increase earnings through market share gain and industry growth. The world is trending towards a “winner takes all” economy, so owning the industry leader of a high growth industry is the best investment.
4
Selective Indexing
Stock picking in Consumer Discretionary and Technology is much more effective than in pharmaceuticals and materials. For example, no investor can accurately predict an FDA ruling or how the price of oil will move. Instead of playing a losing game, our funds utilize index funds to get exposure to these great industries without running the risk of underperformance.