Using separately managed accounts (SMAs) to hold client assets has several benefits:
Peace of mind:
You own your account and only provide us with a revocable and limited power of attorney to trade on your behalf. We do not have the ability to withdraw funds from your account.
You can look at your account at any time.
Insulation from other investors:
You cannot be forced to sell during a downturn to meet withdrawal requests from other clients. You own your own cost basis and cannot be forced to pay unnecessary taxes due to the actions of other clients.
Stocks are businesses and should be purchased on the basis of sound business principles. We look for businesses we can understand, that have some sort of competitive advantage or moat protecting strong returns on capital, and that are operated by shareholder-friendly management teams. The business is only purchased if it is available at a rational price that we feel carries with it a margin of safety. We believe satisfactory long-term results can be achieved without the use of margin, options, or short selling.
We believe in patience coupled with decisiveness when opportunity arises. Because great businesses are often recognized by the market as such, their prices are often too high to justify an investment. When an opportunity does arise we believe in conviction. Client portfolios are generally limited to ten to fifteen businesses, with the top five representing the majority of the portfolio. This approach is consistent with a business ownership mindset.
We eat our own cooking. We steward your capital as if it were our own because substantially all of our own investable assets are managed just like other clients.
Temperament in the investing process cannot be overrated. In the face of external market influences driven by human fear and greed, the ability to calmly and rationally assess risks and opportunities is paramount to long term success.
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