1. The Primacy of Risk Control

Our primary goal is to achieve superior performance with less-than-commensurate risk. The most significant investment risk is not price volatility, but rather the potential for permanent loss of capital. We will never engage in situations where our downside is not sufficiently covered.

 

2. The Benefits of Specialisation

Specialisation is the surest path to achieving the results that we and our investors desire. We establish explicit charters for each investment specialty and adhere to them unwaveringly. Our circle of competence is at the forefront of our decision-making process, ensuring we possess acute industry insight and a discernible edge for synthesising a comprehensive understanding of a business. We strive to know every potential investment with exceptional intimacy. 

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3. The Importance of Understanding Mr. Market

Mr. Market serves us, not guides us. If he appears in a particularly foolish mood, we can either ignore or take advantage of him, but falling under his influence would be disastrous. Investors must be certain they understand and can value the business far better than Mr. Market; otherwise, they have no place in the game.

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4. Intellectual Honesty must be Maintained 

At the heart of all our success is one simple cornerstone: intellectual honesty. The important thing is to know what you know and know what you don't know. What we mean by this is four different things: know what you know, know what you don’t know, know what you don’t have to know, and realize that there is always a possibility that you don’t know that you don’t know. Those four things are distinctly different. In a crisis, things emerge that test you on all four categories. Accurate and complete information is vitally required at all times.

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5. Macro-Forecasting is Not Critical to Long-Term Investing

We believe consistently excellent performance can only be achieved through superior knowledge of companies and their securities, not through attempting to predict broader economic, interest rate, or securities market trends. Therefore, our comprehensive investment process is entirely bottom-up, based on in-depth, proprietary, company-specific research.

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6. Hunting for Pockets of Market Inefficiency

We believe that certain less efficient pockets in markets reward the passionate application of skill and effort for our clients, and it is only in these markets that we invest. We patiently wait for sufficient inefficiency within our circle of competence, acting decisively and adaptively to secure the best long-term results for our investors.

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