Just as we are extremely disciplined about the prices we are willing to pay, we are very diligent in the process we follow to find, monitor, and select excellent companies.
We start with a blank canvas in order to maximize our pool of opportunities, but always keeping in mind the objectives of achieving superior long-term, absolute returns while minimizing the risk of capital loss. Our lens is wide open – we do not let commonly-used filters such as relative weightings, sector targets, geographic boundaries, beta, or GIC codes limit our opportunity set. There are wonderful investment opportunities that fall between the cracks of these conventional approaches.
When we come across great businesses, they are more-often-than-not trading at prices that do not provide us with the margin of safety we demand. In these cases, we will add them to our "Wish List" and wait for better pricing. Even the best companies can be poor investments if purchased at the wrong price. Quality alone is not enough.
Our "Wish List" is dynamic. Companies are constantly reviewed to assess their quality and valuation. At the same time, our existing investee companies are continually monitored, and their investment merits are compared to those of the companies on the wish list. It is an iterative process that is disciplined, rigourous, and repeatable.
We screen through thousands of companies to uncover those that meet our strict criteria. Those which make our wish lists are thoroughly investigated. We pore through financial statements and build proprietary financial models. We comb through as much of the written documentation as we can: official corporate documents, research reports, industry publications, newspapers, and opinion pieces. We speak with people inside and outside the company: company management and board members, industry experts, and other leaders and stakeholders whose views are invaluable. We don't invest in any company we don't thoroughly understand because when we buy their shares, we take very seriously our role as owners.
Our clients never have to worry about "style-drift" – we simply can't imagine investing any other way.