The London Company views equity ownership in the same pragmatic manner in which
a conservative, rational businessman would, if he was buying the entire company.
"Investing is most intelligent when more business-like." -Ben Graham
The London Company strives to maximize investor return and minimize any potential loss by applying the principles of a disciplined and pragmatic process, relying on facts, not speculation.
- We pay strict attention to each company's sustainability of return on capital and resulting free cash flow and balance sheet to derive its strategic value.
- We identify superior companies with proven, shareholder-oriented management by analyzing their actions, incentives, capital allocation and personal ownership.
- We use a proprietary balance sheet optimization model to determine a company's intrinsic value, using conservative assumptions.
- We focus on our best ideas in order to allow the portfolio to outperform.
Our Goal is to Consistently Outperform with the Lowest Downside Risk
Look beyond the Street's near-term horizon with a long-term businessman's approach:
- We buy companies with the ability to consistently generate high cash returns on capital.
- We buy companies when they can be purchased at a discount to private value.
- We optimally diversify to achieve superior returns.
Companies with the highest returns on capital, bought at reasonable valuations, outperform the market.
- High cash return companies are generally more predictable and are able to consistently generate free cash flow.
- Cash flow can be used to grow the business, buy-back stock, or pay growing dividends.
- Opportunities exist when these companies are trading at a sizable discount to intrinsic value due to the market's focus on short term, but resolvable, problems.