As minority owners in a handful of businesses, our portfolio is structured with a long-bias market orientation. We seek to limit our holdings to only our best ideas, so we can know our companies well and allow all our positions to have a meaningful impact on performance.

On the long side, we only want to invest in 10 – 15 businesses at a time. We start with a three year investment horizon and target companies we can easily understand. We like to keep it simple and look for companies that score well on four critical success factors:

  • Moat: sound competitive position with attractive returns on capital
  • Management: proven execution ability and capital allocation acumen
  • Money flows: predictable, understandable and growing
  • More: opportunities for reinvestment at attractive rates of return

On the short side, we will occasionally target a few small positions for absolute profits, and we seek to mitigate market risk with short ETFs, opportunistic hedges and cash.

We don’t believe that widespread diversification will yield a good result. We believe almost all good investments will involve relatively low diversification.
Р Charlie Munger