Steven Romick

We know our investors are going to worry about their portfolios over short time periods, but we explain to them that we won't. We try to look at short-term market gyrations as nothing more than opportunities to smartly enter or exit a position, subject to valuation and fundamentals. While I hope that keeps us rational, [...]

Steven Romick

One big reason we like to hold cash is that my inherent nature is to feel something better to buy is always going to come along and I want to have the cash available to buy it. People assume they can always sell something to buy something better, but I don't like potentially selling into [...]

Steven Romick

We don't benchmark at all. I don't care if we own almost no financials and I don't care if we own an excess amount of energy. We'll go where we think the value is and let the weightings fall where they may.

Steven Romick

We try to take a page from the Weizmann Institute, a leading scientific research center based in Israel. Weizmann has a world-class reputation, a result of their having the largest patent and royalty stream of any academic institution in the world. If you talk to the scientists there, they believe very strongly that their success [...]

Steven Romick

We set an upside target for each holding, which is not the maximum expectation we have, but the level at which we reasonably expect to be able to sell in the future. When we're right, we'll generally hold until the shares reach that upside. The reality is that we can't do the level of due [...]

Steven Romick

I'll say it in a way that implies more precision and rigidity than we use, but we also want to see potential upside versus downside of at least 3:1. If at normalized earnings levels in two years or so we see an upside that is three times the downside we could imagine in the next [...]

Steven Romick

We ask what our expected rate of return would be if we owned the whole business, which is essentially taking pretax free cash flow and dividing it by the current enterprise value. For pretax free cash flow we look at normal earnings before interest, taxes, depreciation and amortization, less maintenance capital spending. In the denominator, [...]

Steven Romick

We believe in reversion to the mean, so it can make a lot of sense to invest in a distressed sector when you find good businesses whose public shares trade inexpensively relative to their earnings in a more normal environment. But that strategy [in 2008] helped lead many excellent investors to put capital to work [...]

Steven Romick

In general, the best thing for us is to find companies that have really stumbled, but where you can look at their past and understand why they are going to earn something much better in the future. That’s opposed to looking at a company like Amazon.com, for example, which might be a great business, but [...]

Steven Romick

We gravitate toward larger, diversified companies where the inefficient pricing comes from an excessive focus on short-term issues that we expect to mean-revert. If we’re wrong, in a big company our downside risk is limited because there are other parts of the business that can hold up value or even increase overall value if we [...]