Investment
Investment Philosophy
Information Analysis Framework
- Diversity of sources
- Weighing by reliability of source
- Ground level presence & channel checks across ecosystems
- Seek disconfirming evidence to negate one’s hypothesis
Analytical Framework
- Diversity of experience and orientation
- Clear “what to avoid” policy
- Sensitive to accounting shenanigans, corporate governance and capital allocation
- Capital preservation requires healthy dosage of scepticism
Decision Making Framework
- Prudent awareness of biases and heuristics in decision making
- Non-correlation and sell discipline
- Striving to err on the side of caution
- Focus on embedded expectations and alternative opportunity costs
Incentive Alignment Framework
- Eat your own cooking everyday
- Reward performance on longer timeframes
- Avoid “one leader many followers” culture
- Encourage radical transparency and meritocracy
Invest in companies that can compound their capital at an above-average rate while incurring a below-average level of risk and at attractive valuations
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Our Prerequisites
High Returns
- Sustainable ROCE
- Competitive advantage & pricing power
- Reinvestment opportunity
Quality Management & Integrity
- Efficient capital allocation
- Clear distribution & retention policy
- Good corporate governance and minority shareholder friendly
Superior Balance Sheet
- Prudent leverage
- Good margins with conservative accounting policies
- High free cash flow
Attractive Valuation
- Balance of valuation multiples compared to growth
- Portfolio metrics and risk analysis
- Margin of safety