We only allocate capital when the odds of success are stacked strongly in our favor. We look for low-risk/ high-reward investment themes. Some call it asymmetrical investing, we call it common-sense.

We seek to find these favorable investment scenarios by adhering to our strong view that most industries are cyclical and while history might not repeat exactly, it often rhymes. We couple that belief with our view that emotions play a key role in investing and at cyclical bottoms, investors anchor to a recency bias that extrapolates the most recent past into the future and miss changes taking place either beneath the surface or hiding in plain sight. The longer the industry is mired in a bear market, the deeper the bias.

Lengthy bear markets provide not only cheap valuations, but an abundance of industry specific talent that often, due to circumstances beyond their control, provide us with an opportunity to partner with them to help deepen our industry knowledge. 

Our style does not appeal to most people. Bottoming processes can take time and can certainly be volatile. We do not believe in the popularly held investing belief that broad diversification across many industries reduces risk and volatility. Rather, we believe finding an industry(ies) that is misunderstood reduces the risk by providing us with the opportunity to invest at valuations that provide us with the extremely attractive risk/reward we demand. Most investors take comfort in crowds. We prefer to be one of just a few.