Our foundational belief is that capital markets are efficient over the long term and inefficient over the short term in certain circumstances.
We believe that intrinsic values in the long term are determined by fundamentals. Technical, psychological and liquidity factors influence trading values in the short term. These short-term influences can create attractive opportunities for the alert, diligent and patient investor focused on fundamentals.
Learn about fundamental, technical, psychological and liquidity factors >Fundamentals - a security's "intrinsic" value.
With corporate-issued securities, intrinsic value is the present value of the cash flows that will be distributed to owners of a security (from the company's operations or the sale of operations and/or assets). It is discounted at a rate that reflects the time value of money (money compounded by an interest rate), the risk that expected cash flows will not be obtained, the volatility of the cash flows and the security's liquidity.
Technicals - a security's historical trading pattern and price.
An example of a strategy that relies largely on technical analysis is "momentum," where investors purchase securities that have recently appreciated in price in expectation of further increases.
Psychology - the propensity of investors to make investment decisions based on greed and fear.
Investors who have made money in an investment are often inclined to hope for additional profits and increase their exposure, while investors who have lost money in an investment tend to worry about more losses and reduce their exposure.
Liquidity - the amount of capital committed to investing in an asset class or security relative to the size of the asset class or security.
Assuming that intrinsic value (see Fundamentals) remains unchanged, supply and demand dictate that security prices will rise when additional investment capital enters and fall when it exits an asset class or security.
Learn about the difference between intrinsic and trading values >
Investment Philosophy
- Risk Control is Job #1
- Adherence to a Detailed Investment Process
- Proprietary, Detailed Research
- Patience
- Constantly Learning
- Macro Forecasts are Not Critical