Designed to outperform active and passive alternatives over the long term.
Market- and economy-agnostic
- Proven ability to weather changing macro conditions, outperforming over a full cycle in up markets and down markets.
- Flexible, event-driven investment process with mandate to look across regions, industries, and market cap ranges in search of the most inefficiently priced securities – which should therefore offer the best risk-adjusted returns.
Long-term risk-averse orientation
- 3-year-plus investment horizon
- We will let an investment thesis play out over three-to-five-year intervals, instead of managing to quarterly or annual results.
Concentrated portfolio, limited fund size, commonality of interests
- Commitment to keep the fund small, letting us pursue only our highest-conviction ideas in structurally inefficient markets.
- Our fund manager has placed his entire net worth in the Fund. We only win if our investors win.
Competitively advantaged investor base
- We select only those investors who share our owner mindset, value orientation, and singular focus on long-term results.
- Our investors give us the freedom to ignore the short-term & focus on what matters; long-term, net-of-fees, after-tax returns.
- “Seamless web of deserved trust”
Passion, ability, and dedication
- Our passion, hard work, self-awareness, creativity, strong interpersonal skills, difficult-to-replicate external relationships, and ability to “see the runway” and “connect the dots” further distinguish us from peers.
Patient, contrarian investment philosophy and long-term time horizon
- Most managers are myopically focused on next quarter’s fundamentals instead of intrinsic business value, an approach ill-suited to long-term wealth creation.
- Institutional pressures prevent these managers from exploiting long-term opportunities that are “bumpy” in the short-term.
- Longer holding periods also reduce trading costs and improve tax efficiency.
Long-term, highly selective partnership
- The most successful partnerships (Buffett, Baupost, etc.) resulted from the manager being just as selective of LPs as the LPs were of the manager.
- For that reason, we will readily sacrifice fund size by rejecting potential investors who do not share our long-term, value-oriented mindset.
- Ability to call upon our knowledgeable, distinguished investor base to discuss investment ideas and leverage experiential insights.
Small size and focus on small-cap growth companies
- Most institutional investment vehicles cannot invest in smaller companies due to mandate restrictions and other non-economic factors, creating a materially less efficient market.
- Smaller companies lend themselves to more thorough due diligence and, ultimately, a much higher level of conviction. It’s much harder to get an edge – i.e., to develop unique insights -- on widely-followed large caps.
- The law of large numbers works in our favor: It’s easier for a $50 million company to reach a $1 billion market cap than it is for a $25 billion company to reach $500 billion. (Similarly, it’s easier for a small fund like ours to generate high returns than it is for a much larger fund.)
It’s a huge structural advantage not to have a lot of money.
I think I could make you 50% a year on $1 million. No, I know I could. - Warren Buffett