I've always told people I have no idea what the market's going to do or when returns will appear in the portfolio. I don't think either of those is predictable. The best we can do today is to focus on companies with balance sheets to weather a creditconstrained world, business models that will be around [...]
We typically have 15 to 20 positions. Our general feeling is that if we don't like something enough to own a 5 percent position in it, we should wait to find something else. Put another way, if the only way you can feel comfortable about an idea is to own less of it, to my [...]
One distinction we generally try to make when betting more on industry cycles is that something should be cheap based on the current numbers, not just on what is considered normalized earnings. That makes it a more conservative investment with even more upside when the cycle eventually comes back.
The underlying principle is what someone would pay in an arm's-length transaction for the entire business. We usually arrive at that by applying what we consider to be the appropriate multiple to estimated EBITDA one year out, adjusted for the balance sheet. To enter a position, we want to see a 30 to 40 percent [...]
Access to management is very important to us. Our starting point is usually disappointment and decimated stock prices, so we need to understand fully what the problems are, how they arose, whether management recognizes them, what they're doing to fix them, and how consistently the fixes are being applied. All of that requires regular interaction [...]