Our Research Process

Our process begins with a thesis as to why a particular company may grow profitably for the long term. In order to test a thesis on a company, we study the business’ economics, competitive advantages, market position and the skills and energy of its management. We also study the competitors and the prospects for the industry. Our studies take us worldwide in order to compare and learn. Our due diligence covers speaking to customers, suppliers and competitors to learn as much as we can about each business.

We prefer to rely on in-house research and invest only in situations where we have done our own legwork. Interest is inspired by a thesis, preferably proprietary, as to why a company can generate above-average long-term growth and match or exceed all competition. Once we have a growth thesis, we spend a great amount of time and effort to get to know and assess management. We believe execution is at least as important as clever ideas.

Our work involves a large amount of reading, from company annual reports and regulatory filings, to newspapers and trade magazines. We try to visit companies and meet with management, either directly or via conferences. We try to find and learn from industry experts, who are in a position to know the details and nuances of particular companies and their management teams. These experts may be industry consultants, customers, competitors, suppliers or ex-employees. Analysts’ reports, field trips, scuttlebutt and the views of industry participants are all important inputs.

An important aspect of our research process is its company-specific nature without regard to the big picture, which we consider to be unpredictable. Our decisions are based on long-term considerations, not on the short-term issues of market cycles or economic cycles.