CONCENTRATE IN OUR BEST IDEAS

FOCUS ON HIGH-QUALITY COMPANIES

INSIST ON A MARGIN OF SAFETY

INVEST IN BUSINESS WE UNDERSTAND

INVEST FOR THE LONG-TERM

EAT OUR OWN COOKING

The following principles guide how we invest our clients' (and our own) assets.

We concentrate in our best ideas. We believe common sense requires that you invest in your best investment ideas. Although this approach generally results in investment performance that is out-of-step with the broad market, we believe it should result in superior investment performance over longer periods of time.

We focus on high-quality companies. We focus our investments in companies that meet our high-quality criteria. These companies have clearly identifiable competitive advantages and defined business strategies; attractive financial characteristics including high levels of profitability, low capital intensity, and high levels of excess cash flow; strong balance sheets; and competent management with a shareholder-oriented capital allocation policy.

We insist on a margin of safety. We are bargain hunters. We only invest in companies that are "on sale" allowing us to buy $1 of assets for 60-80 cents. Buying assets cheaply increases the odds of investment success while reducing long-term loss of capital.

We invest for the long-term. Many investors are unduly influenced by short-term events that have no impact on a company's long-term business prospects. We take advantage of this short-term orientation by investing in companies whose long-term asset values are being undervalued by other investors. By holding our positions for extended periods, we share in the company's long-term business growth while minimizing our portfolio turnover.

We only invest in businesses we understand. We readily admit that many companies face such uncertain futures that they cannot be valued using bottom-up, fundamental security analysis. If we can't understand a company's business or if we believe its future operating results are too uncertain, we will simply avoid it. As concentrated investors, we are comfortable avoiding entire sectors of the market.

We eat our own cooking. We have a substantial portion of our net worth invested alongside our clients. Our financial interests are clearly aligned with those of our clients.






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