Investment Philosophy

We never forget that in macro, we only have hunches; in the micro, we can develop justifiably deep conviction.

-Seth Klarman


We believe outsized returns are earned over time by investing in great businesses at attractive values. A great business is one that is well managed, has a scalable long-term opportunity, and generates superior returns on incremental capital along with a strong track record of execution and governance. Assessing valuation is a critical element of our research. We perform in-depth valuation analysis to identify companies which, we believe, are trading at a substantial discount to their intrinsic value. We look for companies where our estimate of cash flow or earnings, and hence intrinsic value, is significantly different from what the market has priced into the stock. Valuation is attractive when the current market price is at a substantial discount to intrinsic value. We tend to focus on economic free cash flows instead of accounting cash flows and ascribe terminal value based on greatness of business.

Our investment strategy has a long-term absolute return focus. We have a simple yet powerful investment philosophy of stock picking approach of investing in businesses, rather than betting on macro.

We generally look to avoid businesses with weaker characteristics such as poor corporate governance, weak incremental returns on capital and those that face obsolescence risk arising out of technological developments. Poor corporate governance could manifest in various forms like siphoning of cash or value, manipulation of stock prices, unethical business practices or misaligned interests, and weak returns on incremental capital could be because of excessive competitive intensity in the industry or due to misallocation of capital.