Margin of Safety - the three most important words when investing
Only an excellent business bought at an excellent price makes an excellent investment. We must be satisfied about the quality of a business before we attempt to buy the shares at an attractive price.
Business Perspective Investors start from the premise that there is no philosophical distinction between part ownership and outright ownership.
The moral of our approach is that only an excellent business bought at an excellent price makes an excellent investment. One without the other just won’t do.
Our investment methodology is based upon the principle of Business Perspective Investing. We also run a concentrated portfolio of investments and try to keep portfolio turnover down. Companies selected for investment consideration must exhibit several important criteria:
Comprehensible business model;
Transparent financial statements;
Enduring franchise with pricing power;
Consistent operational performance with relatively predictable earnings;
High returns on capital employed;
Strong free cash flow;
Strong balance sheet;
Management focused on delivering shareholder value; and
No undue reliance on acquisition-led growth.