Principles

• Preservation of capital and sufficient safety margin when deploying said capital.
• Bias for portfolio holdings and assets that do not have counterparty risk.
• Sustained income streams from asset classes that have intrinsic value. Consideration is given to free cash flow and debt coverage in addition to dividend yield.
• Macroeconomic, sector, and company-specific fundamentals guide the core of portfolio holdings, while we are assessing the cyclical component of risk.
• When uncertainty and high volatility prevail, we employ hedging strategies in order to mitigate risk and preserve capital including the use of stop orders and option trades.
• Exploit inefficiencies in the market using various options strategies to enhance portfolio return.
• Once a target has been achieved, outright profit-taking, position reduction and/or stop loss measures may be employed to ensure that we lock in existing profit and protect against a possible period of consolidation.
• A global perspective that analyzes market fundamentals while considering geopolitical dimensions.
• The risk profile of the investor will guide the particular strategy utilized, which will be rules-based.

Our perspective on investing includes (among others) the following elements.

• Identification of dormant assets that have intrinsic value
• Asset classes whose value is below its historic 3-5 year average (cyclically adjusted) and whose business generates sufficient and growing earnings. Emphasis is placed on dividend growth history
• Businesses that have a significant market share, enjoy some barriers to entry, and whose competitive advantage separates them from the crowd
• Businesses that have profit margin power, sufficiently positive free cash flow, and pay a healthy dividend that is significantly above the 10-year Treasury note
• Businesses whose management has exhibited strategic competencies demonstrated in growing sales, executed with professional ethical power
• Historically strong balance sheets with major emphasis on prudent use of leverage
• Exploiting ETFs of industries and sectors that hold the above principles and goals
• Mr. Market – as Benjamin Graham would have said – offers opportunities based upon ephemeral trends and mood swings. Based on our principles and value position we evaluate market-entry and exit points in order to take advantage of those opportunities
• If we believe that a particular asset class and/or a particular security has reached bubble territory and is unsustainable then we would not hesitate to short that particular asset class and/or security
• A minimum amount of cash (or cash equivalents) is preserved for those opportunities
• In times of uncertainty we utilize options strategies (covered calls, vertical spreads, etc.) that are intended to generate returns in accordance with the client’s mandate and risk profile