To us, investments are long-term and non-speculative. We consider ourselves and our co-investors as long-term co-owners of companies. Therefore, we do not consider investments in equities as speculation of whether the stock will rise or fall in the near future, but rather as a process of investing in the long-term value that we believe the companies can create for us as shareholders.
We do not necessarily invest in the most renowned or popular companies, but merely in the companies that we assess to have a high standard of quality and superior capabilities in long-term, sustainable value creation.
In this regard, long-term is defined by us as “as long as possible”. But how long is that? This time horizon is principally infinite. Yet, we do follow the development of our portfolio companies critically, but we seldom change a portfolio company. However, when this does happen, it is most often based on the finding of another company that we believe will have a more attractive, long-term investment potential.
Our aim is to generate attractive, long-term returns, which after all costs are above the market return on a three to five year horizon. In order to meet our goal of generating long-term excess returns, we will invest in a diversified group of companies that are highly capable of generating large free cash flows as well as consistently high returns on their invested capital that are above the average for comparable companies.
We are searching for companies with a solid, attractive, and lasting business model and skilled management. The companies should further be able to provide financial reports that are transparent and document the ability to create wealth for the shareholders – and we always keep a critical eye on the companies. Occasionally, it might happen that we decide to sell shares, even in good and well-managed companies, if we believe the price of the company has become too high compared to what we find appropriate for the company in question.