Longs:

 

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• The firm has a focus on high-quality businesses. Absent tactical considerations, we generally approach valuations and target price range construction on longs over a 3-5+ year investment horizon.

• We seek to establish long positions in companies where the market valuation is likely materially below or toward the lower end of the intrinsic value range.

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Shorts:

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• We have a long bias in our portfolio positioning over most of a market cycle.

• We approach short positions both opportunistically on a company specific basis and tactically on a macro basis when we want to reduce market exposure and client risk.

• We seek to establish short positions where the market valuation is likely materially above the intrinsic value range and where we can see the underlying facts confronting investors in a reasonable time frame.

• Our short positions are often in deteriorating businesses where the extent of the deterioration in earnings power, financial or competitive positions is under appreciated; or in materially overvalued businesses. In both cases we seek a catalyst or event. We approach short investments with a 6 month to 2 year investment horizon. In practice the horizon is usually less than a year.

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