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| We attempt to build downside protection into our process by
evaluating and quantifying the risks versus the reward opportunity of
every investment in the portfolio. This is achieved by analyzing:
free cash flow; the intrinsic or asset value of the company; price-to-sales
and/or price-to-tangible book value. This analysis helps
us to assess downside risk should unexpected adverse events unfold.
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| While we do not have a mechanical sell discipline, we will typically
either eliminate or trim positions when they no longer meet our
three critical factors. Moreover, we perform a rigorous review on
any investment that declines materially in price.
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