An Introduction to My Investment Philosophy

Introduction

This post is a simple introduction to my investment philosophy. I hope to provide some context regarding the nature of my analysis, my areas of interest, and the perspective behind my investment theses.

Non-indexed companies

I prefer to look at small to mid-sized companies which are not listed on major indices such as the S&P 500. While I don’t believe smaller companies are inherently better investments, I do think that the uneven distribution of analyst coverage and institutional interest make for a less efficient market more suitable for active investing.

Minimal assumptions

I prefer to keep my assumptions for future results as simple and conservative as possible and avoid stocks that are priced for significant growth. Naturally, this leads to my investible universe being mainly comprised of mature or out-of-favor companies.

Environment for value realization over catalysts

I believe our community’s preoccupation with catalysts leads us to find them where there are none. I prefer to focus instead on corporate governance and management that allow value to be realized for shareholders. With mature businesses in potentially declining markets, I find it better to return cash to shareholders than to invest in growth which may not materialize.

Leaving room for error

Since mistakes are inevitable, I prefer to make room for error rather than pretend I can avoid it entirely. This is the main reason for my aversion to highly concentrated portfolios and speculative valuations.