We complement our value-investing approach and rigorous reasoning process with a mindset which is:
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Opportunity-sensitive
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Cycle-sensitive
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Macro-sensitive
to find places where there are the most amount of fish.
And we
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Learn from nature and complex systems when analyzing market
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Couple such an understanding with the principle of value investing and margin of safety to generate outstanding risk-adjusted returns.
We believe that:
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Capital cycle is one of the most predictable macro-features of a capitalist system
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Undervalued opportunities at the bottom of the capital cycle deliver the highest risk-adjusted return.
So we snatch undervalued companies with
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Durable Moat
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Scarce Capital
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Low Valuation
To take advantage of the mean-reversion process.
Ourselves the students of nature and we believe in the philosophy of water.
The investment landscape is a contour that morphs as a function of time.
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When the contour is placid and flat, we invest in a variety of high quality businesses and adopt a decentralized strategy to protect against the general inflation of the market;
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When exogenous shocks happen and the contour is deformed in a substantial way, we substantially increase our concentration to take advantage of such opportunities.
Preferably, our concentrated positions have a clear and present catalyst such as to enhance our capital efficiency.
Our defense is an objective assessment of the static state of the business hinged on moat analyses and competitive landscape dissection, such that our investments have an innate resilience in the face of cyclical adversity
Our offense is an anticipatory gradual transformation of the value of the underlying asset, whether it’s cyclical upturn, business transformation through merger & acquisition, deleverage, and/or recapitalization.