Experience has taught us that the management of return is impossible – outcomes are extremely unpredictable in investing and timing is uncertain at best. Consequently, we focus on what we can control – process.Broyhill Asset Management
We utilize many different ways to generate ideas to research. We screen for companies with above average underlying business performance. We sift through the latest SEC company filings everyday. We read institutional investor SEC and international filings. We read everything we can related to investing on the internet and in libraries. We also like to search for companies that are under followed by analysts.
Once we have found a company that is within our circle of competence, we read everything we can find on that company and their competitors. We read annual and quarterly statements and investor presentations. We focus on reading the footnotes where others could over look. We track the management’s incentives, past history and take a hard look at the shareholder base. We also from time to time contact the company’s management and competitors.
Sometimes we might judge the price of the company to be priced for perfection which would include higher risk if we were to invest at that time. We run concentrated portfolios so we want to be absolutely sure we are buying for a great price. We do not like risk and will wait. We will wait for the company to have a short-term challenge causing the share price to decline to a more attractive price. This is one of the most overlooked and hardest aspects to investing.
When the company is trading at an attractive price we do not sit on our laurels, we buy with conviction. We tend to allocate large percentages of the portfolio in a limited number of quality companies. There are so few great companies for below average prices, so we usually have less than 15 stocks at a given time. Remember our goal is to provide the most long-term value to clients, so we have to be very careful what we choose and how much we buy.
Our clients are our partners, and we keep them up to date on their investments with a letter each quarter. We want to make sure clients understand what is happening and how their businesses are performing.
Our target holding time frame for each company is generally 3-5 years. Selling can be the hardest aspects to investing and we focus on our selling process only when other more attractive opportunities arise or will reconsider our investment if there has been a large change in the long-term prospects of the company or a significant change in management.