The core tenets of our investment strategy have remained constant throughout the firm’s history while still allowing us to take advantage of different opportunities in diverse market environments. This flexibility has resulted in portfolios that have varied in emphasis over time. However, the key principles of our investment philosophy have always been consistently applied as follows:
High Quality of Business
We believe in the importance of investing in high quality businesses with defensible franchises, attractive long-term growth potential and attractive returns on invested capital because high quality businesses generate greater compounding of wealth over time.
Opportunity for Value-add
Our goal is to be the largest or among the largest shareholders and to build a partnership with management and the board of directors allowing us to initiate and often implement value-added strategies that enhance shareholder returns. Our proposals include a broad range of financial, operational, and governance initiatives with the objective of maximizing equity value over time.
Our primary focus is the small- and mid-capitalization sectors of the market, which we believe tend to offer more attractively valued investment opportunities. In addition, smaller and mid-sized companies afford greater potential for influence and value-add on our part than larger companies.
We are long-term investors. Our long-term perspective allows us to take a partnership approach with management teams whose time horizons are similar to our own. The average holding period for private equity investments made by our Strategic Funds has been five years.
Our strategy is to limit investments to a relatively small number of our best opportunities and to focus our efforts on adding value to those portfolio companies. Combined with our highly selective investment criteria, intensive research and ability to implement value-creating initiatives, we believe concentration is critical in achieving our goal of superior returns.
Rigorous Research Process
Consistent with our private equity approach, we apply a highly rigorous process in researching potential investments. We believe our concentrated portfolio strategy requires this level of private equity due diligence in order to minimize investment risk.