We look for great companies. The value of a business is the amount of money it will create for its owners over its lifetime, but working out what that figure is beforehand is complicated. Therefore, we are drawn to companies that have greater control over their own profitability.
Typically, this is because of the enduring strength of their franchise, which establishes them as a dominant force in their industry. They have persistently strong cash flows, reinvested at high rates of return, which helps them navigate entire economic cycles.
Crucially, these attributes translate into resilience. The businesses we look for compound their profits sustainably over the long term and should be better insulated from a deteriorating macro environment.
When all this comes together, the result is a differentiated source of alpha which can help grow client capital over the long term.