Philosophy
Most participants in a market are answerable to someone on a shorter clock than ours. That is not a claim to superior insight. It is a structural difference, and it is the one we try to use.
What follows is not a strategy. Strategies change with prices and rates. These are the standing commitments that decide how we respond when they do.
We underwrite an investment on the assumption that we will still hold it through at least one full cycle. This rules out a great deal — anything whose case depends on a near-term catalyst, a sentiment shift, or a buyer arriving on schedule. What remains is a smaller and more durable set of ideas.
A permanent loss of capital cannot be recovered by a later good year; it removes the base that compounding would have worked on. We therefore spend more time on how an investment could fail than on how well it could do, and we size positions so that being wrong is survivable.
Returns are reported before tax and experienced after it. Turnover, the timing of realizations, holding periods, and the location of an asset across accounts all change what an owner actually keeps. We treat the after-tax number as the real one — and we built a public tool that shows how wide the gap can be.
Diversification protects against ignorance, and we hold plenty of it where we have no particular view. But a portfolio spread so thin that no single holding matters has traded the possibility of a good outcome for the certainty of an average one. We would rather understand fewer things properly.
Leverage converts a temporary decline into a permanent one by taking away the ability to wait. Where we use debt it is at the asset level, matched to the asset’s own cash flows, and sized so that a difficult period is inconvenient rather than terminal.
Cash earns little and costs a great deal in patience. Its value shows up only in the moments when other people are forced sellers and we are not. We would rather carry that cost continuously than be the one selling into a market that has stopped bidding.
We do our own work and we are willing to look wrong for extended periods, because a position that everyone already agrees with is usually priced as though they do. Independence is not contrarianism for its own sake; it is a refusal to outsource judgment.
The three areas where we commit capital, and what we look for in each.