Investment Selection

The Search for Investment Opportunities

We look for excellent profit margins and above average returns on capital

We demand a solid and conservative balance sheet

We like companies with durable competitive advantages

We want capable and honest managers focussed on creating value

Estimated Intrinsic Value

Conservative models and assumptions are used in trying to predict the evolution of the business

We simulate different scenarios in order to test the resiliency of the business

We compare the company being evaluated with similar companies

Margin of Safety

We apply a margin of safety to determine the price at which we are willing to invest

This is the crucial step that allows us to substantially reduce the risk of permanent loss of capital

We only buy the asset when it is trading at a 30% to 40% discount to its intrinsic value

Investment Horizon

We do no try to guess the short term movements of the market: we invest for the long run

We periodically reassess our valuation model and the estimate of intrinsic value

We hold the investment until the market recognizes its true value