Jon Jacobson

There's a big difference between loving to win and hating to lose, which has a lot to do with one's approach to risk. Someone who loves to win is willing to take a lot of risks because the euphoria of winning outweighs the bad outcomes. If you hate to lose, though, any bad outcome is [...]

Jon Jacobson

I arrived at a rigid quantitative discipline because otherwise I would have no idea how to sell. It struck me that if you let your emotions dictate when to sell, you risk falling in love with companies that have been doing well and you ride them too long, and then something goes wrong. I guess [...]

Jon Jacobson

Given our value bias, we tend to buy early and sell early. Often in our best investments the shareholder base changes, from value investors to GARP investors, and we miss out as that full transition takes place and the true believers completely take over. I've come to accept that and consider it kind of inevitable [...]

Jon Jacobson

Our hedging falls into three primary buckets, which vary in emphasis over time. Typically the biggest one is a global market hedge, in which we use things like index options, index futures or credit default swaps to insulate the portfolio, to a defined level, from big market dislocations. The second bucket is directly related to [...]

Jon Jacobson

To be successful in any business you have to have a certain competitiveness and a certain paranoia. In our business where they keep score every day and your problems are staring you in the face, you need to be incredibly focused on the problems in the portfolio and constantly assess whether your analysis is right [...]

Jon Jacobson

Margin of safety comes from as many places as possible, but primarily from the strength and sustainability of the business model, low valuations relative to book value or cash-flow multiples, and undervalued hard assets or other assets on the balance sheet.

Jon Jacobson

Every investor wants to find well-managed companies, with defendable market positions, that generate a lot of free cash flow that is reinvested intelligently. The problem is, those companies typically don't have valuations we can accept as value investors. So we look for businesses that qualify on a few of the ideal characteristics and that we [...]

Jon Jacobson

Most shareholders of undermanaged or poorly managed companies vote with their feet rather than push for changes in management, board composition, or strategy. So, poor management persists because shareholders aren't willing to do anything about it, which we think is an abdication of responsible ownership and fiduciary duty. But even if big shareholders have a [...]

Jon Jacobson

We're trying to find 20 to 30 long investments, run by management teams that truly understand the cost of capital and capital allocation, where we believe based on a dividend-discount model that we're paying 60 to 70 cents on the dollar today and that that dollar can grow at an equity rate of return. If [...]

Jon Jacobson

One key source of opportunity is when companies are building new assets that will generate incremental revenues, prof- its and cash flows. Many times these are what we often see value in holding companies, where there are several disparate businesses and a single earnings multiple doesn't capture the true value. Or in companies that own [...]