INDUSTRY FOCUS

We focus mainly on dynamic industries going through disruption and/or consolidation due to innovation and technological change, often leading to outsized winners and losers and along with opportunity both long and short.  We typically spend months, if not years, monitoring and researching a given industry to gain expertise and understand the past, current, and future landscape and opportunities before we deploy capital.  We then identify the players in a given industry, all the way from incumbents to upstarts. 

 

BUSINESSES WE TARGET

After building the expertise in a given industry, we focus on gaining an understanding of the businesses and models within that industry we believe will be long-lasting, worthy of investment, and those believed to become tired, obsolete, or a shell of their former selves.  We approach each investment with an extensive research and due diligence process and seek to understand and identify those businesses and models that we believe are innovative, forward-looking, well run, and set up for substantial lasting future growth.  Our preference is to hold investments for the long term.  We avoid, or even short businesses believed to be resistant or unable to change, lack innovation and adaptability, or that have poor management.  

 

Management WE SEEK

We always want the management of businesses we own to be forward looking, doing what is best for shareholders in the long run.  Often times, what is best in the long run may not be best in the short run.  This is where we see poor management come into play.  Many CEOs are so focused on short term metrics and pleasing Wall Street analysts, that they actively make decisions to improve short term results to the detriment of long term value.  They often would rather boost short term EPS in lieu of investing in research, technology, and innovation to drive long-term growth.  A short term boost may be nice, however, we are always looking towards the future and have no problem going against conventional Wall Street views. 

 

OPPORTUNITY SET

Unlike many investment managers, we are happy to invest in compelling opportunities of all sizes and industries.  We believe many are misunderstood and potentially harder to value given the dynamic nature of many industries.  It is our view thatIn our view, many investment firms , and Wall Street in general, misunderstand and/or have a hard time valuing businesses, (especially upstarts or strong players with new technology) in rapidly changing industries.  To us, they are too reliant on traditional valuation models or shortcuts (P/E ratios, Earnings growth rates, etc.), potentially leading to an incorrect over or undervaluation of a given investment.  We do not discount traditional models, however, we see them as helpful mainly in stable environments.  In what we view as a dynamic, rapidly changing current and future environment, our goal is to examine, research, and dial-in to those measures we believe could play a role in predicting a business’s longevity, some of which may be subtle and contradictory to traditional Wall Street views.