• Companies that have experienced earnings declines often become significantly undervalued. This can be especially acute among under followed and less liquid small cap companies. As a result, identifying successful turnarounds before they occur is exceptionally rewarding.
  • Risk, defined as the permanent loss of capital, can be mitigated by purchasing the stocks of companies with durable businesses and conservatively financed balance sheets when the stocks are out of favor. This practice can also mitigate volatility and short term losses.
  • The rewards of active stock selection are amplified by concentrating the portfolio in a limited number of high conviction positions.

Those beliefs culminate in a disciplined investment decision-making process requiring every new purchase to possess four specific traits, a discipline we have dubbed “The Four Cs”:

  1. Change
  2. Cheap
  3. Competitively Stable
  4. Conservatively Financed

We believe companies possessing all four of these traits offer exceptional investment opportunities.