Our strategy
A fundamental, patient and disciplined approach to building a long-term portfolio.
Philosophy
Boring investing, on purpose
We believe good results come not from chasing fads, but from a repeatable process applied with patience. We invest bottom-up: we read financial reports in full, run channel checks and, when possible, visit companies in person. We only invest within our circle of competence: if we do not understand how a business makes money, we stay out, no matter how attractive it looks. We think like business owners, not gamblers.
This philosophy is documented in the founder’s book, The Most Boring Stock Investment Book You’ll Ever Read, which describes in detail the process we apply.
Process
The six pillars of analysis
Every company we analyze must pass six tests before becoming a portfolio candidate:
- Management — Track record, incentives and character of the executive team. A bad CEO can destroy even a great business.
- Industry and competition — The company’s competitive position and the structure of its industry.
- Economic spread — Return on invested capital (ROIC) must exceed the cost of capital: that is where value is created.
- Margin of safety — We buy only when the price offers a substantial discount to our estimate of value.
- What can go wrong — Every investment has something wrong with it; if we have not found it, we have not looked hard enough.
- Catalysts — We identify the events that can close the gap between price and value, and their time horizon.
Portfolio construction
Every position must pass a checklist before entering the portfolio. Candidates are ranked by expected annualized return, and only the strongest make it in.
- 15 to 35 stocks, each with a specific role within the portfolio.
- Mainly United States (around 65% today), with geographic diversification when opportunities arise.
- Medium-term horizon: positions held 6 months to 3 years, sometimes longer. Value gets recognized over time.
- No penny stocks, no cryptocurrencies.
- For larger portfolios, a complementary income layer using options on portfolio stocks may be added, depending on each client’s profile.
Sell discipline
Selling matters as much as buying. A position is sold when it reaches our target price, when the investment thesis breaks, or when a clearly more attractive opportunity appears. We document every decision so we can learn from it.
What we don’t do
We don’t promise returns. We don’t use aggressive leverage. We don’t chase fads. We don’t invest in what we don’t understand.