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1. To be conservative in our investments and financing. All managers want to beat a certain index they benchmark to. By avoiding losses and compound consistently, the end result over many years will be great. But if you lose 50% in one year, it will take 100% the next year to catch up.
2. To avoid permanent loss to capital with a relatively concentrated portfolio. Slow and steady wins the race, which is why we don't short businesses or use leverage. If we manage to generate adequate returns above a certain index, the magic of compounding will help us generate good long term results.
3. To be fair and transparent with like-minded long term partners. It's all about fair and aligned incentives. No management fees. We believe in not taking a profit unless we meet a hurdle. This means setting standards and rejecting clients/partners who don't share the same long term views. This means clear and simple writing and not promising one thing while doing another. It also means not changing the benchmark used for annual results.
4. To treat stocks as businesses and invest in surer enterprises which I can understand, provided that there is at least near a decade or more of financial history. It is better to have modest gains than placing wild bets with low probability. To quote Thomas Carlyle, "Our main business is not to see what lies dimly at a distance, but to do what lies clearly at hand." Avoidance of pharmaceuticals and certain speculative industries is necessary as we cannot predict the future.
5. To pick each investment in terms of risk and opportunity cost. Risk does not mean volatility. There could be catastrophic risk in an older industry such as retail due to it being disrupted by technology companies.
6. All client's and partner's information is kept confidential. We hope that partners will reciprocate by not publishing online any of the annual letters or transcripts from annual general meetings. We strive to be as low key and discrete as possible.
Please direct all inquiries to jeff@allcvr.com.
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