The dividend income generated by stocks is an important source of liquidity for investors that have an ongoing need for cash flow. The opportunity to participate in the long-term growth trajectory of well-run businesses is among the greatest ways to hedge inflation and achieve real capital appreciation over the long-term. We allocate capital to stocks when the investor has a modest need for dividend income, desires the opportunity to experience long-term real capital appreciation, and is willing to tolerate drawdown volatility in the pursuit of long-term reward. We diversify the allocation to stocks across economic sectors and prefer to own 40-50 securities in position sizes that manage company specific risk relative to the overall portfolio. Our strategy engages a global universe of companies and seeks those that compete in fundamentally attractive industries, are run by highly competent management teams, and exhibit a competitive advantage that is sustainable. We are attracted to companies that are growing their revenues, expanding their free cash flow, and generating strong returns on invested capital. We give preference to those that are dedicated to allocating capital back to shareholders.

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