Margin of Safety

Our portfolios are concentrated, with 10 to 25 names but no more than 15% of the portfolio in any one investment as measured at cost. Portfolios are managed without regional, sector, or market capitalization constraints. We pay no attention to benchmarks. Cash is a residual of our investment opportunity set.

We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.

- Warren Buffett

You are neither right nor wrong because the crowd disagrees with you.

- Benjamin Graham

Investing is most intelligent when it is most business-like.

- Benjamin Graham

Patience, patience, and more patience.

- Peter Cundill

Independence

Investment Management Ltd.

Tempered

Our Investment Strategy

Patience

We are 'tempered' when faced with uncertainty, pessimism and fear over a downturn. We do not shy away from market volatility, but rather embrace it, as these situations provide investment opportunities.


In evaluating potential investments, we use a minimum three-year investment horizon. Patience is therefore required to realize the full value of our investments. Collecting dividends while we wait is helpful.

We ensure that every investment has a margin of safety, which is the difference between a stock's intrinsic value and the price we pay. The key to a reliable margin of safety is a stable or growing intrinsic value.


We consider our primary source of risk to be a permanent loss of capital – not Beta. We manage this risk by means of rigorous bottom-up fundamental and qualitative business analysis, in order to intelligently and objectively estimate intrinsic value of potential investments.


In estimating intrinsic value, we emphasize three factors:

  • Valuation – discovery of mispriced situations
  • Management Ownership – evidence of shareholder-friendly governance 
  • Business Quality – conservative estimates of earnings durability and growth


We sell our investments when there is no longer a margin of safety, whether through investment appreciation or the impairment of fundamentals.