The London Company — Philosophy

Philosophy

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.

Why?

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.