Golden Harbor’s Investment Philosophy (May 2017)
We are common-sense, long-term (3-5 year+ horizon) investors focused in identifying healthy, disruptive, or innovative businesses that will win the next decade, not the next quarter or year.
We will NOT invest in contrarian ideas for the sake of being contrarian. It’s easy being contrarian, but much harder being contrarian and right. We are 100% open to contrarian ideas supported by ample data but we don’t have a strong aversion to so-called “consensus” ideas either. Our experience finds that the market systematically underestimates disruptive companies that benefit from sustainable paradigm shifts, and we aim to take advantage of this opportunity.
We will NOT sacrifice business quality and depth of “moat” for the sake of “cheap valuations”. Valuations are inherently backward looking and do not take into account the inherent qualities of the underlying earnings stream. All else equal, we prefer to pay a fair price for a wonderful business than vice versa.
We strive to find disruptive business that take advantage of recessions to accelerate their competitive advantage. Despite people crying about “high market valuations” and “bubbles” on a daily basis, we actively embrace, rather than eschew, market volatility. We invest and partner with businesses that get stronger during a recession, and welcome market selloffs to add to our positions in businesses whose intrinsic value is getting larger, not smaller, during recessions.
We believe having a diverse set of background and exposure to different industries makes one a better investor, not worse.
We hate debt. There are plenty of businesses out there with minimal debt or net cash. We prefer to sleep better at night buying businesses free of fixed obligations to creditors.
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