At Silver Heights Capital Management Inc., we manage money differently. Three crucial factors set us apart:
Founders and senior employees have the majority of their investment portfolios invested in the same assets that clients hold. It strikes us as odd that there are firms where the investment managers are prohibited from investing in the securities they select for their clients. Quite frankly, we don't think this arrangement best serves clients' interests. We believe that clients benefit the most when their interests and ours are strongly aligned. In simpler terms, "we eat our own cooking".
That may sound like a strange declaration, but it is a very important point. You may say to yourself, "Aren't all investment managers focused on delivering good investment returns, first and foremost?" Unfortunately for the investing public, this may not always be the case. At Silver Heights, we promise that our primary focus will always be on investment excellence.
Investing is our passion - and we devote countless hours to researching, learning about, and selecting businesses that we believe will deliver the best risk-adjusted absolute returns. From the outset, our aim was to be the best investment firm, not the biggest.
Pooled funds are common in our industry. They are administratively easier to manage, but they have one significant drawback: when a client's money is added to a pool, the client essentially buys every holding in the pool or fund at that day's prices. If you had the chance to ask the manager of a pool, "If it were your money, would you have bought every stock in the fund at today's prices?", the answer would likely be "No". Instead, if it were their money, they would have probably chosen only those stocks they thought offered the greatest value at that time, and patiently waited for more attractive pricing for the others.
At Silver Heights, because each of our clients has their own segregated account, we can deploy a client's capital into only those opportunities that are the most attractive. We call this our "fresh money™" approach to deploying a client's capital. By having the ability to cherry-pick the most attractive opportunities, we increase our margin of safety, while enhancing the likelihood of generating more attractive risk-adjusted returns. This is a far more time-consuming approach, but we do it this way because this is how we would want our money to be managed.