“The future is never clear, you pay a very high price for cheery consensus, uncertainty is actually the friend of the buyer of long term values”

Warren Buffett
The word partnership plays a critical and we believe differentiating role in our business. We believe very firmly in the concept of “eating our own cooking” and will at all times have the majority of our money invested in the fund. Furthermore it is a partnership between the investee companies and us
The fact that we have the whole world to choose from is an asset not a hindrance. Due to our concentrated nature we need not hold hundreds of stocks but have the flexibility to select only the very best available and are not constrained by geographical or benchmark boundaries

Most equity funds are benchmarked to various market indices. In my opinion this leads to herd like investing. Most fund managers earn performance fees simply by beating the index over the following three months. This frequently appears to be their only concern.

The fund has a 4% annual compound USD growth rate as its benchmark, which is an approximation of long term USD inflation. It is a far fairer benchmark for investors, as in weak equity markets the investor is significantly better off. The investor is only slightly worse off in strong equity markets, because of the cumulative 4% factor that must be beaten before any performance fees are due.

The fund has only one concentration rule, namely that no single holding can be greater than 20% of the total fund value. This is a very different approach to most fund managers, as they frequently take hundreds of stock positions. I believe it makes no sense to invest in a multitude of different stocks. It is far better to invest in 15-30 of your best stocks. This allows you to know them inside out and select the companies with the best risk adjusted upside.

Unlike most fund managers who frequently have minimal capital invested in their fund, I will at all times have a minimum of 80% of my net wealth (excluding my primary residence) in the fund. In any given year a minimum of 2/3 of any profits generated by the partnership will be invested back into the fund and in the first three years the re- investment will be 100%. I furthermore undertake to have no other investment vehicle; similar rules will apply to anyone who is employed by the fund. As you can see I firmly believe in the concept of “eating my own cooking”. At any given point in time I might not have the most in absolute terms invested, yet in percentage terms any poor performance will have a far greater impact on me and other members of the investment team. If investment professionals were held to similar standards, I believe we would never have had the crisis of 2008/2009. Unfortunately the casino mindset is so firmly entrenched in financial markets that such a move is highly unlikely.