Investment Philosophy
Acknowledging the randomness at play in many markets allows us to focus only where we have genuine insight. Rather than pretending to predict unpredictable markets, we concentrate on understanding individual businesses deeply—where facts and analysis create real competitive advantages.
“In the short run, the market is a voting machine but in the long run, it is a weighing machine.”
- Benjamin Graham
Building Wealth Through Superior Business Selection
Focus on Business Fundamentals
We compound wealth by owning high-quality businesses. We seek companies with superior economics—high returns on invested capital, strong balance sheets, and products or services critical to their customers.
The Power of Patient Capital
Time is your ally when owning businesses that consistently generate profits, reinvest for value-accretive growth, and reward patient shareholders. By maintaining a long-term perspective, we let superior business economics drive returns rather than merely attempting to profit from market fluctuations. Your wealth compounds alongside the fundamental progress of the businesses we own.
Quality Without Boundaries
Our search for exceptional businesses has no geographical or sector constraints, only the limits of our circle of competence. We stick to businesses we can understand—where available facts allow us to form qualified opinions on the industry's viability, the sustainability of competitive positions, and the ability to generate valuable growth.
Margin of safety: The Cornerstone of Successfull Investing
At the heart of our investment philosophy is the margin of safety — buying high-quality businesses at prices meaningfully below their intrinsic value. This approach provides protection against permanent capital loss while laying the foundation for superior long-term returns.
We view risk not as market volatility but as the potential for permanent capital impairment. Downside protection is central to our investment policy. We believe lasting investment success begins with avoiding permanent losses. By preserving capital first, wealth can compound.
As fundamentals assert themselves and quality gains recognition, the gap between price and value closes, transforming the margin of safety into superior returns.
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Research and Independent Judgment: The Path to Finding Value
Where Value Hides
Investment opportunities exist where perception diverges from reality—when markets misjudge capital allocation abilities, undervalue competitive moats, overlook growth potential, or miss resilient earnings power. Finding these gaps often entails going against the crowd, as they occur where conventional wisdom is most entrenched.
Clear Thinking in Volatile Markets
Markets veer between optimism and pessimism, often driven by emotion rather than logic. We maintain analytical discipline and systematic thinking to profit from others' sentiment-fueled behaviors. Remaining rational when markets become irrational is essential to investment success. Our long-tested investment process is a critical yardstick in this endeavor.
Knowledge as a Competitive Edge
Deep research into business fundamentals and competitive dynamics builds the conviction needed to be contrarian. We immerse ourselves in understanding businesses: studying annual reports, technical papers, and industry research. We speak with executives, competitors, and industry experts, and often visit operations firsthand. This intensive fieldwork helps us cut through the noise and gives us the confidence to act decisively when opportunities emerge.
"The stock market is filled with individuals who know the price of everything, but the value of nothing."
- Philip Fisher
Capital Stewardship and Voting Policy
Our owner mindset shapes how we approach capital stewardship and voting in the Lloyd Capital ETFs. While conscious that we are only minority shareholders, we nevertheless seek to promote what we believe are the most long-term value-accretive practices when engaging with company management. Where we encounter fundamental disagreement with a company's strategic direction that cannot be resolved, we will exit the position. We conscientiously exercise our voting rights on our core positions, assessing each vote based on what we believe will best support sustainable, long-term value creation.
