- Purchase businesses at a discount to their intrinsic valuesClose
BBH's estimate of the present value of the cash that a business can generate and distribute to shareholders over its remaining life.
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- Use a valuation approach based on long-term forecasts
- Apply a trim/sell discipline that is valuation sensitive
- Compound returns as portfolios generate solid, secular earnings growth.
- Perform extensive due diligence and holistic analyses incorporating industry dynamics, key competitors, customers and suppliers.
- Seek conservative balance sheets, strong free cash flow, and attractive returns on invested capital.
- Purchase shares at reasonable discounts to our estimates of intrinsic value.
- Achieve strong absolute returns over full economic cycles.
- Target holding periods of 3-5 years.
- Deliver attractive performance relative to the MSCI EAFE Index over a full economic cycle.
- Reduce likelihood of permanent loss of capital on any single investment
- Expect to outperform in weak markets.
- Maintain an internal culture of investment excellence marked by mutual respect, rigorous debate, intellectual curiosity and collegiality.
We seek to preserve and grow capital over full economic cycles by consistent application of our investment principles:
- Concentrated holdings; portfolio construction is sector and benchmark agnostic
- Primary due diligence incorporating deep fundamental analysis
- Seek to invest in outstanding businesses that can grow their intrinsic value materially over time
- Willing to own companies for many years, through all parts of an economic cycle
- Ongoing company engagement deepens our insights over time
- Focus on cash-generative businesses that provide essential products and services, and can prosper in varying economic conditions
- Identify and analyze material ESG-related considerations
- Demand a dual-faceted margin of safety that seeks to mitigate both business risks and price risks
- Adhere to strict investment criteria
- Seek to avoid low probability, high severity risks
- Exploit divergences between market prices and underlying intrinsic values
We define risk as the likelihood of sustaining a permanent capital loss on any investment, and do not equate it with short-term stock price volatility.
The Margin of Safety concept is a key part of our risk management approach, and we believe it has two critical components that must exist in tandem:
- Business Risk Mitigation – Focus on businesses with resilient characteristics and well-managed risks, including ESG factors.
- Price Risk Mitigation – Purchases are made at discounts to our estimates of intrinsic value and positions are re-sized or sold as these discounts diminish.
What Makes Us Different?
- Concentrated portfolio reflecting the team’s highest conviction ideas and strict adherence to our investment and valuation criteria.
- Our portfolio’s regional, country, currency, and sector exposures are an outcome of our bottom-up investment process.
- Extensive industry and company due diligence by seasoned analysts, enhanced by ongoing peer review, form the foundation of our investment process.
- We foster independent thinking among our team of analysts and portfolio managers to promote ideas and perspectives.
- We promote a culture of humility, collaboration, constant learning and continuous process improvement.
How to Invest
A less favorable ESG profile may not preclude the Adviser from investing in a company, as the consideration of ESG factors is not more influential than the consideration of other investment criteria. Considering ESG factors as part of investment decisions may result in the Adviser forgoing otherwise attractive opportunities, which may result in lower performance when compared to advisers that do not consider ESG factors.
This communication is for informational purposes only and does not constitute an offer or a solicitation to buy or sell any particular security or to adopt any specific investment strategy. The information herein has not been based on a consideration of any individual investor’s circumstances and is not investment advice, nor should it be construed in any way as tax, accounting, legal or regulatory advice. Any views and opinions are subject to change at any time.
Strategies are shown without regard to whether they are offered as separately managed account mandates or through pooled vehicles. Any discussion of or reference to any given strategy herein should not be taken as a recommendation or solicitation of any pooled vehicle which has an investment objective featuring or similar to such strategy.
There is no assurance that a portfolio will achieve its investment objective or that the strategy will work under all market conditions. The value of the portfolio can be affected by changes in interest rates, general market conditions and other political, social and economic developments. Each investor should evaluate their ability to invest for the long-term, especially during periods of downturn in the market.
The Strategy portfolio may assume large positions in a small number of issuers which can increase the potential for greater price fluctuation.
Foreign investing involves special risks including currency risk, increased volatility, political risks, and differences in auditing and other financial standards. Prices of emerging markets securities can be significantly more volatile than the prices of securities in developed countries and currency risk and political risks are accentuated in emerging markets.
The Strategy also invests in derivative instruments, investments whose values depend on the performance of the underlying security, assets, interest rate, index, or currency and entail potentially higher volatility and risk of loss compared to traditional stock or bond investments.
NOT FDIC INSURED ● NO BANK GUARANTEE ● MAY LOSE VALUE