About

 

“You have to turn over a lot of rocks to find those little anomalies. You have to find the companies that are off the map – way off the map”

– Warren Buffett

 

I classify myself as an unreasonable opportunist. Unreasonable because I’m only interested in buying a wonderful business when it is being offered at a wonderful price – I endeavour to avoid falling into the neo-Buffett camp who justify paying any price for perceived compounders. Opportunistic in the fact that I am indifferent as to where I find investments. I don’t look for themes to invest in, nor do I focus on certain sectors, I fish where the fish are. If the business is within my circle of competence, it’s a potential investment.

 

So, what’s my edge? For starters, I think it is important to differentiate between edge & anomaly. I seek to exploit the following financial market anomalies:

  • Value investments tend to outperform over time
  • Smaller companies tend to outperform over time

 

Therefore, I look for small, cheap companies. However, cheap can mean many things to many people, and I tend to prefer companies that do not appear cheap on a first level basis, but instead require some digging below the reported financials that most screens use to determine a securities cheapness.

 

My edge comes from focussing on the parts of the market that sophisticated investors either avoid or are unable to invest in. Therefore, I focus my time looking at:

  • Micro-cap companies
  • Esoteric stock exchanges
  • Foreign markets
  • Situations that create un-natural holders of a stock: spinoffs, post-bankruptcies etc.

 

“The one who follows the crowd will usually get no further than the crowd. The one who walks alone, is likely to find himself in places no one has ever been.”

– Albert Einstein

 

By focussing on these ponds, I increase the probability of developing an informational, analytical or transactional advantage.

 

Finally, by investing in a concentrated manner (holding less than 10 investments on average), I can afford to exercise extreme patience, because I only require 1 or 2 no brainer ideas each year to generate an acceptable return.

 

“The wise ones bet heavily when the world offers them that opportunity. They bet big when they have the odds. And the rest of the time, they don’t. It’s just that simple”

– Charlie Munger