We like Principles because they’re a roadmap for making successful decisions. Though we have many Investment Principles, below are some of the most important.
ALIGNMENT OF INTERESTS
At Global Return, we own our decisions. That’s because our money is invested alongside our clients. It’s contradictory that “advisors” don’t own the same stocks they suggest their clients own. We apply this same perspective to the companies we invest in – executive management needs to have a significant ownership in the company’s stock.
OUR HIGHEST PRIORITY IS RISK ANALYSIS
Each stock has within it sources of risk and return. Therefore, we believe that security analysis is risk analysis and we’ve never understood why people separate these. Our priority is to avoid stocks with disproportionately more risk. The results should be superior performance without commensurate risk.
WE SEEK LONG-TERM COMPOUNDING
We invest in easy to understand companies that we want to own for long periods of time. These companies have lengthy track records of successfully compounding their returns and are operated by honest and able managers with whom we’re comfortable investing our capital.
Over short periods of time the market is inefficient. Psychological and emotional mayhem causes volatility in the stock market which creates buying opportunities for astute investors. We attempt to capitalize on these opportunities when a stock’s price is substantially below its long-term value.
POLICIES AND PROCEDURES
These are the backbone of how we analyze risk, analyze companies, and invest our capital. We use comprehensive and systematic checklists to conduct quantitative and qualitative analysis every step of the way. We’re fanatical about this because it reduces the potential for error and enables us to evaluate our processes and enhance our results.