Our Process
Regions & Industries
We begin by identifying countries and sectors where our research shows favorable economic trends. Next, our research team evaluates macroeconomic indicators such as political stability, demographics, and monetary policy when considering geographic locations for investment.
Finally, we consider environmental and social responsibility, long-term viability, and general outlook when selecting which sectors to cover. We drew heavily on the philosophies and strategies of investors like Warren Buffett, Benjamín Graham, Philip Fisher, and George Soros to create and refine our investment methodology.
Selection & Analysis
After selecting broad areas of interest, we narrow our focus to a select group of publicly traded companies we consider exceptional. Initially, we screen companies for size, growth, profitability, business model, and a stable track record. Next, we estimate the intrinsic value of companies that pass our screen by carefully examining and continually updating metrics like financial performance, leadership, creativity, and potential risks. Each company is valued on an annual basis. Our rigorous methodology covers more than 50 qualitative and quantitative measures.
The selected companies form our index and comprise all the companies we want to own long-term. Although our ±400-company index consists of roughly 1% of global companies, the market cap of our index represents about 25% of the market capitalization of global equities. We believe this is a biproduct of our effort to cover the biggest and brightest market leaders. However, we do not exclude smaller companies we believe have excellent business models and competitive advantages we think will lead to a bright future.
Our index is not set in stone. We periodically add new companies we find interesting and delist companies we sour on from time to time. We cover a very diverse universe of companies but generally exclude companies specialized in fungible commodities, incarceration, harmful consumables, and non-value-added products.
Portfolio Execution
We regularly compare market prices to our fair value estimates for our preferred companies and use available resources in your account to invest on your behalf when we perceive above-average returns. However, markets can be temperamental and, at times, overvalued. As a result, your long-term returns can suffer if purchases are made at unreasonably high prices. For this reason, we tend to develop portfolios more quickly in times of market volatility and work more cautiously in times of stability and exuberance.
Our portfolios are crafted with individual positions in companies. Direct ownership allows us to exclude business models we dislike, companies we consider overvalued, companies with negative or highly uncertain outlooks, and companies where we expect the emergence of a superior or disrupting business model.
This strategy also allows us to partially or entirely liquidate companies that no longer appeal to us. This single task is almost impossible with most other advisors since they primarily use funds and other derivatives to build portfolios. Therefore, we reject funds, other derivatives, and asset classes in favor of a more focused, tactical approach to investing and diversification.
Tracking Performance
Our team provides you with valuable insight and support on an ongoing basis and delivers monthly performance reports keeping you informed and helping you track your progress. We also send newsletters during what we consider relevant market events. Our newsletters cover market levels, sectors, interest rates, and provide our near, medium, and long-term outlook to the US and global economy.