|
Risk Management/Sell Discipline
We believe that risk management starts in the research process and having a disciplined approach to security selection. We seek to mitigate unsystematic risk through a diversification of company holdings in the portfolio while still adhering to our core buy and hold strategy. Our investment philosophy is grounded in the belief that long term investors are rewarded through patiently owning quality companies with sound business models. In the event that business fundamentals change, we do not hesitate to exercise our sell discipline, scrutinizing those assets that are underperforming in the portfolio. Our sell discipline calls for the portfolio management team to intensely review a position if the position is down more than 20% form its original average cost, there is a material change to our thesis for owning the company, deterioration in the fundamentals has occurred (company specific/sector) or an alternative, more attractive investment opportunity has been identified. Essentially, the intent is to analyze the underperforming company again as if were going to be a new position, asking ourselves “should we own this company” instead of the more common option of “should we continue to hold” the position.
|