Investment Philosophy

  • Our investment philosophy is nuanced but can be simply stated as we believe in value investing principles, prefer owner portfolio managers who have “skin in the game” and “eat their own cooking” which tends to provide greater oversight and caution when making investment decisions, and lastly of course is that costs matter in the long-run. The active mutual funds we invest in tend to have below average expense ratios as we take advantage of our capital base to get institutional pricing for our clients, regardless of individual account size.
  • Our asset allocations are derived from an Investment Policy that defines a client’s risk tolerance and then we use a Manager-Based Tactical Asset Allocation to construct client portfolios. We take into account held away and company plan holdings to ensure there is a balanced approach when putting capital to work.
  • Many of our core managers are boutique investment firms who appear better at managing capital for their shareholders than producing large marketing budgets. These management teams tend to close their funds when management deems there are not cheap enough securities to warrant putting new capital to work. They have no problem using cash as ballast to the portfolio and we view this action as a strategic decision, providing a natural rebalancing when valuations appear frothy. We also believe that limiting additional capital flows into a fund is the prudent act of a true fiduciary to their shareholders.
  • Managers who are given the flexibility to go anywhere and own out-of-benchmark stocks and who make independent investment decisions, in our opinion, are more likely to preserve capital and hopefully outperform over the long-term. Understanding the difference between a temporary impairment of capital (i.e. the risk of a security being temporarily depressed due to market fluctuations) vs the more troubling predicament of a permanent impairment of capital (i.e. bankruptcy or a default) is key to having the unique temperament required for long-term, absolute return oriented investing success. As the great value investors Warren Buffet opined “Be fearful when others are greedy, and greedy when others are fearful” and Sir John Templeton, “Invest at the point of maximum pessimism”, having confidence in one’s analysis is key to long term investing success.
  • Invest like a business owner, strategic and long-term oriented. Know your history and do not repeat the mistakes of the past.
  • We believe that markets are emotional, human creations that can be invested in prudently by diversifying markets, asset classes, managers and durations by actively rebalancing portfolios in times of volatility.
  • By maintaining a value investing bias, we intend to avoid overvalued investments and strive to avoid catastrophic losses.