Our team of investment professionals performs original fundamental research on publicly traded common stocks. We use this research to build institutional client portfolios that are concentrated in our best ideas.
Our research effort focuses on qualitative differentiators of businesses. We search for competitive excellence in our investments, with particular emphasis on business quality, management talent and value creation potential. The objective of our investment process is to identify the small number of companies with the ability to grow shareholder value at exceptionally high rates for long periods of time.
We believe that above-average stock price performance results from above-average compounding of intrinsic business value. We focus our research on qualitative factors related to value creation at the business level, including competitive positioning; management skill and character; and capital allocation opportunities. Our goal is to limit our investment opportunity set to “the best business, run by the best people” and concentrate client capital in the subset of stocks with the highest total return potential.
Competitive forces dictate that most businesses fail to earn in excess of their cost of capital over extended periods.
Competitive forces dictate that most businesses fail to earn in excess of their cost of capital over extended periods. However, companies with durable competitive advantages – which we refer to collectively as a “moat” that protects a business from competition – can avoid this fate through structural characteristics that preserve profitability. We thoroughly assess the sources of a company’s “moat” – including cost advantages, intangible assets, network effects and switching costs – and the likelihood that they will persist over the long term.
Exceptional people create and maintain exceptional companies.
Exceptional people create and maintain exceptional companies. Our assessment of management extends beyond the obvious protections and alignment of interests that we require as passive, minority shareholders. We also look for integrity, operational excellence, capital allocation acumen, competitive drive, and an ability to win in a dynamic marketplace.
We prefer to invest in businesses with ample opportunity to continually reinvest capital at high incremental rates of return.
We prefer to invest in businesses with ample opportunity to continually reinvest capital at high incremental rates of return. The ability to compound earnings power per share is a primary contributor to intrinsic business value and is often overlooked by market participants with a short-term horizon. Our long-term orientation allows clients to benefit from underappreciated sources of growth within a business, including market share gains in large, fragmented industries; expansion into newly formed or adjacent markets; commercialization of underutilized intellectual property; and execution of value-enhancing acquisitions. Traditional business valuation methodologies often fail to capture the full benefit of persistent competitive advantages coupled with reinvestment opportunities, thereby dramatically underestimating the future earnings power of the most exceptional companies. Therefore, we believe that it is possible, via a well-funded research effort, to gain a variant perception on the intrinsic value growth potential of a business based on a thorough assessment of pertinent qualitative attributes.
We implement these strategies on behalf of clients in long-only, separately managed accounts.
Our small-cap portfolio is selected from companies trading
between the market-cap boundaries of the Russell 2000 Index
as of its latest reconstitution.
This strategy is currently closed to new investment
Our mid/large-cap portfolio is selected from companies trading between the market cap boundaries of the Russell 1000 Index as of its latest reconstitution.
Our analysts are encouraged to conduct extensive fieldwork, including visits to company operations, meetings with management teams, and participation in industry events.
We are not hiring. If you are interested in working for us, feel free to mail us your résumé. We will keep it on file, but please do not expect a response. When an internal need arises, we will proactively contact qualified candidates.
12600 Hill Country Blvd Suite R-230
Austin, TX 78738.
+1 512 542 1083