MARGIN OF SAFETY
A key part of our strategy is the concept of margin of safety, which applies both to the qualities we look for in an investment and the price that we pay for that investment. A margin of safety exists when a security meets our investment criteria and is trading at a meaningful discount between its market price and our estimate of its intrinsic value.
Intrinsic value is a price that represents our best estimate of the present value of all future cash flows of an investment. By investing at a discount to our fair value estimate, we expect that any mistakes in our estimate or value deterioration will not necessarily result in a negative investment return.