Concentrated investors in high-quality companies at attractive prices that we hold for the long term

We define quality companies as those that exhibit financial strength and have strong competitive advantages, with strong returns on captial, and are managed by honest and capable management teams whose interests are aligned with ours as shareholders.

Benefits of Concentration

Portfolio diversification is essential to reducing risk, but only up to a point. As the chart below illustrates, portfolio volatility is significantly reduced when holding a concentrated portfolio of approximately 20 stocks diversified across multiple industries. We believe adding substantially more companies increases risk because it dilutes the benefits of allocating capital to our best ideas.


graphic

Adapted from James Mortimer, Value Investing: Tools and Techniques for Intelligent Investment (London: Wiley Press, 2009)