Most equity fund managers aim to buy and sell shares of companies in order to “outperform” their peers or an index. That goal determines their style. They emphasize ‘buying’ and ‘selling’. They rent stocks for relatively short periods, on average a year or less, and timing is all-important.
We do something different. We aim to be a long-term owner of mid to large size companies with resilient business models that can weather changing environments and provide attractive returns potential over years, not months or quarters. “In the long run the return on a stock will closely approximate the return on the business.” — Charlie Munger
Critical to this strategy is originating our own research and continually engaging with management to gain insight not reflected in the stock price.
We assess the potential for value improvement by owning businesses with recurring cash flow driven by robust long-term demand dynamics with high incremental return investments. We assess financial risk by balance sheet strength. We assess valuation risk by constantly weighing price against value.
Experience has taught us that investing in companies with these characteristics stacks the risk/reward deck in our favour.
Our house style is designed to deliver superior risk-adjusted returns. Our portfolios are concentrated and differ markedly from market indices. We commonly maintain investments for 5 years or more. We equally weight investments at purchase. And we don’t dilute our best ideas by over-diversifying.
Our ability to adhere to a consistent house style is rooted in the long tenure of our portfolio managers and the fact that they have honed their craft here at Kingwest.
We don’t wish for success, we plan for it. Improving business value. Proven, capable leadership. Price matters. A time-tested strategy that makes Kingwest a secure home for your assets.
