Longs:

 

 

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

• The firm has a preference, all else being equal, towards higher quality businesses. Absent tactical considerations, we  generally approach valuations and target price range construction on longs over a 2-3+ year investment horizon.

 

 

Shorts:

 

 

• We have a long bias 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 materially above the intrinsic value 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.