Investment Philosophy
Long-term. Global. Generalist.
Absolute returns.
How we think about the public equities markets:
Stocks represent fractional ownership in an underlying business or asset and long-term performance is driven by per share compounding of cash flows and growth.
Fluctuating market prices serve as an opportunity to buy or sell securities at offered prices, but do not dictate investing activity.
Seek to avoid permanent losses by having an appropriate margin of safety in all holdings.
How we think about allocating capital, the investment process, and the role of Shadowridge Value:
Invest for double-digit, absolute returns over a long-term time horizon (multi-year/multi-decade). Seek to capitalize on asymmetric opportunities where there is little risk of significant downside and the upside will take care of itself.
Reject investment mandates restricting/requiring specific asset classes, market caps, liquidity levels, exchange-listings, geographies, sector exposures, and/or cash levels. Do not use leverage, margin, or short-sell securities.
Seek out asset classes and areas of the market where securities are misunderstood, the competition is limited, forced-selling occurs, or boredom and neglect tend to take hold.
Conduct primary research independently and obtain fundamentals and insights directly from sources including the company filings, industry/trade publications, former employees, customers, and/or official gov’t data.
Stocks equal partial ownership in a business and valuation should be derived from a bottom-up perspective using equals parts financial analysis, business analysis, & psychology.
People matter. Businesses are simply collections of people (ownership, management, employees) working together to provide products/services for the benefit/consumption of others (customers).
Maintain a relatively concentrated collection of businesses you know well and that exhibit attractive qualitative elements. Assess new opportunities against the portfolio’s current holdings and only replace them if they are superior by a wide margin.
Be wary of leverage and use balance sheet analysis first to assess risk.
The process is controllable, but the outcome is not. Maintain steady emotions and constantly refine routines to support the goal of compounding capital long-term.
Contemplate the decision to sell holdings as much as the decision to purchase them in the first place.
Prioritize clients; always acting with integrity, transparency, and exercising the utmost discretion. Attempt to select investors as carefully as your investments and invest your wealth alongside them.
Mindset matters. Constantly strive to learn and improve. Be willing to change and adapt.