Our Principles

  1. Although our structure is corporate, we think of ourselves as a partnership

  2. Our goal is to grow wealth over the long term, with the informal aim of doubling invested capital every 6-7 years

  3. We will pursue this aim by purchasing future cash flows for less than they are worth in today’s money.  We will do this mainly by buying ownership interests in good businesses at bargain prices. By adopting this approach, we will necessarily treat the buying of shares as if we were buying the whole business.  We will look to the performance of the business for our signals of its success or failure and not to the price attributed to the business by the market

  4. We will only buy something if we are confident that we can make a sensible estimate of the business’s intrinsic value and we can buy the business for considerably less than that estimate.  By intrinsic value we mean the present value of the future cash flows produced by a business or asset to a rational and knowledgeable private buyer

  5. The impact of mass psychology on the market means that the intrinsic value of an asset or business often differs from the price of the asset or business in the market.  This is particularly the case during moments of panic or euphoria.  We will seek to make our profits by taking advantage of this difference in both directions.  In other words, we will buy businesses when we think prices are too low and sell when we think prices are too high

  6. Our default position will be cash. We will only move from cash into an investment when we are confident that we have a sufficient margin of safety between our purchase price and a conservative valuation of the business, as well as the prospect of an outsized return. This means that in certain market conditions, we may appear rather inactive. This is no bad thing in investing. The urge to do something just to be active can be very costly.  If you chase returns, you almost never catch them

  7. We will not use leverage and will always seek to minimise risk by ensuring we only act when we are confident our downside is limited. This will be achieved by investing at a price that provides a margin of safety.  By risk, we mean the risk of permanent loss of capital, not volatility. This is an important distinction. The prices of the businesses and assets we own will fluctuate wildly in the market, but providing we keep our temperament in check and our time horizon long these fluctuations should cause us no concern. Again, we will look to the performance of the business for our signals of its success or failure and not to the quoted price of the business in the market

  8. Our performance should be judged over 3 year periods at a minimum and ideally over 5+ year periods.  Any out-performance or under-performance month-to-month and even year-to-year should not be taken too seriously.  There will be years when we underperform against the market, but there should not be many 5 year periods when we do so.  If there are, we should all start to look elsewhere for places to invest our money

  9. We will write to you at the end of each 6 month period to update you on the performance of the portfolio as well as to let you have any other information which we would like to receive if we were passive shareholders in a business

  10. Finally, and perhaps most importantly, we cannot promise results, but we can promise that our interests will be aligned with those of our partners. The vast majority of our personal wealth will always be invested alongside yours; we will only prosper if all partners prosper