Investment Approach

I seek to achieve superior long-term returns by owning securities of financially strong, well-managed companies. Securities are purchased when their market prices are substantially below my assessment of their intrinsic business value. This appraisal is based on the current operations and my view of the future prospects of the business enterprise. My primary focus is on cash flow, as this is the ultimate source of shareholder value. Securities are often priced inappropriately in the market because cash generation is not adequately valued.

Companies that consistently produce the best results are those with disciplined plans for achieving growth in profits and revenues. They typically have characteristics that set them apart from other participants in similar businesses.

The most important thing is the ability of a company to generate large amounts of cash over the long term. Intermittent fluctuations in earnings or share prices are of less concern.

Sustainable Investing

When we invest in a company, we encourage its activities and share in its profits. It is beneficial to promote behavior that is consistent with sustainable social, economic, and environmental values. This is an important consideration in my investment selection. Many of the companies I partner with as an investor are leaders in corporate governance, environmental preservation, and social equality. Their managements are shareholder-oriented and exhibit high standards of integrity.

Markets

My approach is company specific. I have found, as have other successful investors, that it is not productive to attempt to predict short-term market movements, or the influences of broad-based economic trends or geopolitical factors. Short-term volatility in markets usually reflects emotional reactions to external events. Markets can fluctuate considerably in ways that are unrelated to the underlying value of individual businesses. This can present attractive buying opportunities. Successful investing requires the ability to thoroughly evaluate conditions and the judgment to know when to act different than the crowd.

Investment Ideas

All research is performed in-house. Ideas are generated from many sources, including newspaper articles, investment publications, other investors and portfolio managers with sound records of accomplishment, analysts, computerized screening, Morningstar, company managements, and personal contacts.Investments are only made in companies where other highly successful long-term investors have major shareholdings.

Time Horizon

My investment horizon is long term, with the objective of identifying underpriced securities of companies with outstanding long-term business prospects. It is not possible to predict when the market will recognize their full value. Many of the companies in which I invest are involved in transformative business processes that can take many years to reach their full potential. These are the most attractive opportunities, as they can provide substantial periods of profit growth.

Diversification

The portfolios I manage typically hold fewer than 20 stocks. This reduces risk of loss, because investments are concentrated in my best ideas. This approach also allows me to be well informed about the operations of each company. Value oriented mutual funds with sound long-term records are used to broaden diversification.

Risk of Loss

No guarantees are made as to the future performance of any account or any specific level of performance, the success of any investment decision or strategy that may be used, or the success of the overall management of the account. The client understands that investment decisions made for the client's account are subject to various market, currency, economic, political and business risks, and that those investment decisions will not always be profitable. Investing insecurities always involves the risk of loss.