Focus on the supply side
A strong belief that analysing changes in industry structures and in the amount of capital deployed in a sector is more insightful to future returns on capital.
Alignment of interests
Management who have well-crafted incentive programmes or who have bought significant equity positions themselves are more likely to make good decisions for the long-term health of the company. Effective governance and strong alignment of interests is the control mechanism by which management are incentivised to focus on a broad array of risks which face the company, many of which are impossible to see from the outside.
A framework for the long term
A multi-year time horizon allows us to buy assets when they are trading at a significant discount to intrinsic value, often when they are deeply out of favour, generating real returns for our investors over the long term. It is our belief that effective capital allocation increases the likelihood of the market price trending towards the intrinsic value of the company over time and reduces the risk of damaging behaviour.