Philosophy

Our philosophy is simple:  we manage clients’ money the same way as we manage our own.  As a matter of fact, most of our liquid net worth is invested in the same portfolios as our clients.

We believe in an investment philosophy built on Six Basic Principles.

1. We are value investors. Value Investing has been proven to be the most successful investment strategy with relative low risk. We will employ a value approach in all of our investments. We only invest in stocks of companies with sustainable profitability at reasonable or undervalued prices.
2. When we buy a stock, we are buying a part of the company. We are buying its assets, its business operations. We are buying its debt, too! Because we own a part of the company, we can make money only if the company makes money. We will focus on the companies that have great cash flow, return on equity, and sustainable long term profitability. We prefer companies with growth potential. We like to see that its growth is self-sufficient, instead of growing on debt. Also as value investors, we will not pay for the growth.
3. We will try to avoid industries where strong competitions exist. We prefer companies with strong competitive advantages in industries with high barriers of entry. Although we understand a lot of technologies, we are not good at picking the winners among the competing technologies; we do not believe that company CEOs are better at picking the winning technologies, either. We will buy the companies with simple business, where anyone can make an easy judgment.
4. We strongly believe that a company’s stock will follow its business value, although sometimes it takes a few years for that to happen. We will only invest in companies in which we have strong conviction.
5. Our portfolio will be relatively concentrated. We believe that only by focusing on the companies that we understand the best, we can achieve above average returns.
6. We will not engage in frequent trading. We believe that low turnover rate is beneficial to our shareholders to achieve the highest possible real returns.

In order to further reduce investment risk and achieve above average returns, we will select most investments from the stocks that the best value investors have invested in. These investors include Warren Buffett, Seth Klarman, Glen Greenberg etc., all of them have been in investing business for many decades and achieved outstanding returns. These investors tend do extensive research before they buy, and hold stocks for the long term after they invest. We believe this strategy is “standing on the shoulders of giant.”

We will focus our investments on three areas:

1. The most weighted stocks. These are the stocks that the best value investors have invested heavily in. We will study these companies’ financials and business, invest in the companies that we understand and have confidence in.
2. Bargain stocks. These are the stocks that the best value investors have bought, but the prices have come down. Buying these stocks allow us to get better prices than the best value investors have paid. We will study the financials and the business of these companies to make sure that the companies’ business is strong and can survive and grow their business over long term.
3. To a lesser extent, we may invest in other companies that we think satisfies our value investing criteria. More intensive research will be conducted toward these companies.

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