Investment Process
Ideas move through a deliberate sequence: screener, investment writeups where helpful, checklist review, letters to shareholders, earnings transcripts, proxies, annual reports, and valuation work.
Work centers on earnings power, margins, returns on capital, balance sheet strength, debt structure, reinvestment needs, management incentives, and industry structure.
When useful, research extends beyond filings to customers, vendors, competitors, former employees, trade commentary, product reviews, and management history.
Intrinsic value is compared against market price with explicit downside work. Scenarios are stress-tested under adverse conditions to evaluate survivability, capital structure resilience, and the risk of permanent impairment.
Three buckets, each requiring a different underwriting lens and a different posture on time horizon and catalyst dependence.
Offer a comfortable margin of safety without requiring a single near-term corporate catalyst.
Rarer businesses that can potentially compound value over very long periods and become meaningful portions of the portfolio.
Catalyst-driven opportunities such as spin-offs, mergers, or other corporate events that can temporarily create mispricing.
The Standard Before Capital is Committed
Do we understand the business well? Is it a great or at least sufficiently predictable business within the circle of competence? Is it available at a material discount to intrinsic value?
Those questions are supported by deeper work on returns on capital, industry structure, buyer and supplier leverage, disruption risk, and the durability of value creation.
The tiering framework is used during prospecting and research prioritization. It helps focus attention on the most resilient opportunities first, before allocating capital to businesses that may be more sensitive to economic cycles.
Tier 1
Strong balance sheets, resilient cash generation, and a clear ability to withstand stress without relying on favorable capital markets.
Tier 2
Moderate uncertainty, some leverage or transition risk, but enough underlying strength to remain attractive through a softer environment.
Tier 3
Execution matters more, leverage may be higher, and the path to value realization is less straightforward.
Tier 4
Highly cyclical, discretionary, or levered situations where downside is more sensitive to external conditions and underwriting must be especially selective.