Value before Valuation

• Business value is a function of business model, management, culture and strategy
• Valuation comes only after thorough consideration of these factors
  
  

Competitive advantages form a defensive moat

• We focus on segments that benefit from secular trends, and companies with established or emerging competitive advantages within these segments
• These tend to be franchises with improving product portfolio and profitability

Intrinsic value & margin of safety

• We think of risk as the possibility of a permanent loss of capital
• Therefore, we look to invest only at a discount to our estimate of the intrinsic value of a company
• The intrinsic value is the sum of future cash flows, discounted at an appropriate rate
• Being an estimate of the future, there is a range of possible IVs, and the range changes