We are value investors who also care about quality.
Our goal is to own securities we believe offer an attractive rate of return for the level of risk in the investment. We are able to invest across the spectrum from the highest quality businesses to those with challenges as long as the price we pay adequately compensates us. Our approach, which seeks to achieve solid absolute rates of return over a full market cycle, is focused on individual securities, with a strict discipline on valuation.
Independence
We believe in performing intensive fundamental research. Our team uses a generalist approach, which means all of our analysts are responsible for the entire investment universe we follow instead of divvying up research by sectors. This approach allows us to select the investment opportunities we feel strongest about based on internal debate driven by a deep knowledge of how each security compares to alternatives. We focus on qualitative and quantitative information and are patient as long as our investment thesis remains intact.
Consistent Approach and Stable Organization
We apply our rigorous, disciplined investment approach, which focuses on independent research, objectivity, patience, with a strong emphasis on price. Members of the Management Committee have averaged more than 20 years at the firm.
Patience/Time Horizon
We focus on investments we think are attractively priced instead of what’s popular, which usually comes at a higher price. We judge our results over the long-term and do not construct portfolios based on what a benchmark consists of. This means comparisons to a benchmark should occur against a full market cycle, a time-frame which we believe demonstrates a manager’s skill instead of shorter time periods, which can simply be phases of the market.
Low Purchase Price
Yacktman looks for a security that sells at a price that offers an attractive rate of return given uncertainties the business might face.
We are extremely disciplined about the valuation and believe it is often the most important characteristic in a successful investment. At our firm we often say, “It is almost all about the price.” Low price can help to manage risk and create the opportunity for solid returns.
Good Business
We seek to invest in higher quality businesses at value prices.
A good business may contain one or more of the following:
- High market share in principal product and/or service lines
- High cash return on tangible assets
- Relatively low capital requirements, allowing a business to generate cash while growing
- Short customer repurchase cycles and long product cycles
- Unique franchise characteristics
Shareholder-Oriented Management
Yacktman believes a shareholder-oriented management manages its business intelligently and allocates capital wisely.
We consider management’s results at the company and in previous business endeavors when assessing skill.