I strive to find situations where the market is not properly valuing businesses due to a fundamental misunderstanding, allowing shrewd investors to profit. This often comes in the form of small-cap stocks and special situations, but nothing is off limits if it has a great risk/reward.

• Long-term, value oriented investor
• Demand a large margin of safety—either from balance sheet protection or from franchise value
• Prefer simple investment theses that do not rely on optimistic growth assumptions
• Strive to find excellent businesses that are trading at bargain prices because of a “masking effect”
• Concentrated positions—focus investments on only top conviction ideas
• My portfolio is very long-biased. Short positions, while sometimes attractive, are expensive and generally offer worse risk/rewards
• Focus on obtaining an edge on the market. This is incredibly tough to accomplish, but the rewards are significant. Always understand why your view is the variant view
• Intellectual honesty—admit when you are wrong and always strive to get better. No shame in staying away from situations you do not understand (helps you avoid getting burned).

My investing process has been greatly influenced by the readings and teachings of famous investors such as Bruce Greenwald, Joel Greenblatt, and Warren Buffett, as well as personal mentors and great investors such as John Lewis and David Gardner. While my own investing style is different from all of them, I try to learn a little bit from each of them and incorporate their greatest strengths into my investing framework to help me better evaluate risk/rewards in the market.

Investment Process

1. Where does the stock trade today on the Asset Value, EPV, Growth diagram?
   1. How confident are you in this assessment?
   2. I much prefer buying companies that should trade at Growth + and have sustainable competitive advantages, but are somehow masked and trading at say EPV than companies at NCAV that should trade at book value. The long-term compounding effects of finding great companies skews the risk/reward in your favor
2. Net Cash, NCAV, TBV, BV, Replacement Cost—Asset Value—Earnings Power Value—Growth, +
3. Where do you think it should trade? Why?
   1. Make sure to throw out biases here and really look at all relevant data points
   2. How confident are you in your assessment?
4. What has created this disconnect between your evaluation and the market?
   1. Market view:
   2. Variant view:
5. Is there a catalyst to move from where it is today to where you think it should trade?
6. Play devil’s advocate. The market is extremely efficient. What could you be missing? What is the bear case? List out all the reasons you could be dead wrong and in the red. Finally, use the BS test. What are you really betting on here?

Finally, if you think there is still an opportunity, try to think of all possible outcomes from here and bet accordingly (common stock, options, sizing, etc). I made the following presentation to the Harvard Financial Analysts Club. It summarizes how I translate the thought process above into valuation, which has been heavily influenced by Bruce Greenwald and his book “Value Investing: From Graham to Buffett and Beyond”