Investment Philosophy

Value investors taking advantage of opportunities

We have a value investment approach based on investing in companies that we believe are priced at a discount to our estimate of their actual value based on their capacity to generate cash flow in the future; its magnitude, growth capabilities, and predictability. We believe buying a share means owning a part of the company, so we focus on fundamental analysis and avoid companies with high expectations and weak balance sheets. We believe this approach increases the odds of having better returns in the medium and long term while reducing risk.

• We invest in companies that we believe are priced at a discount to our estimate of their true business value.
• We believe this approach increases the odds of having better returns while reducing risk.

Value Investing

• Buying a share means to own a part of the company.
• Focus on fundamental analysis.
• The value of a business equals its future free cash flows.
  • Magnitude
  • Growth
  • Predictability
• Avoid high expectations and weak balance sheet companies.
• Medium and long term view.

Our portfolio construction process consists of the following:

1. We acknowledge that markets and their volatility generate investment opportunities.
2. According to our investment philosophy, we generate investment ideas (good companies, well managed at an attractive price).
3. We do a deep analysis and due diligence of these companies, including in-house analysis, visits to companies, and sell-side research.
4. Based on this analysis, we make investment decisions to construct a highly concentrated portfolio around 60% differentiated from the index.
5. We sell when the price reaches the company’s intrinsic value, fundamentals deteriorate, we find better opportunities, or we acknowledge we have made a mistake in our analysis.

We have a fundamental approach to risk management based on investments on solid balance sheets, strong fundamentals, liquidity, and cash management of the portfolio. We believe risk equals a loss of capital, and it is higher when it is less perceived and vice versa. We believe there is a difference between actual risk and price risk.