Investment targets

Focus ensures that we can spend sufficient time on each investment decision

We typically have between 15 and 25 holdings at any one time.  This ensures that our portfolio is made up of our best ideas and that each idea has been painstakingly researched and, post investment, is carefully monitored for changes in the fundamentals of the business.  We don’t believe that the small incremental value of diversification achieved above this range is a good trade-off for the downside of diluting our time across too many positions.

We only invest in listed companies which have strong cash flow and strong balance sheets (i.e. a low debt / cash flow ratio or net free cash).  We like businesses which are easy to understand and have enduring moats, i.e. a strong competitive position in markets with high barriers to entry, providing security over future revenue streams through, for example, network effects, a unique brand, assets which are difficult to replicate, patents or licenses.

When looking at the management teams of investee companies, we like smart low-ego risk-averse managers who are growing their business through executing a well articulated and proven strategy. We look for managers with either healthy equity stakes in these businesses or who have a track record of acting in the best interests of shareholders.  We particularly like “Owner Occupied” companies where a founder still has a leadership role in the business.