The qualities we look for in selecting candidates for investment are:
Leadership. To offer good value as an investment, a company should be steering a new and promising course in its field. It must be in a position to lead, rather than follow, its competition.
Quality. A company's products or services must be of superior quality, and improving constantly.
Attentiveness to the Market. A company should be focused primarily on the needs of its customers; its ability to be flexible is a valuable attribute.
Management. The team in charge should have a proven and successful track record. We favor companies whose management has a meaningful personal stake in the ownership of the company.
Franchise. We look for companies whose "good name" helps generate recurring revenue and helps withstand the efforts of competitors. We like companies who are unique in some key way - companies who "own" their franchise.
Sound Finances. We seek out companies with high return on equity, low debt, sound accounting practices, good history of growth, and appropriate cash flow. There is no substitute for financial health.
A sell decision is triggered by one of two factors: a change in the dynamics of a company or its market; or our decision that another company represents a greater relative value.