We seek exceptional growth companies built for long-term success. Our focus is to acquire businesses that offer following qualities:
A Capital structure led by a family or a founder: This ensures strong leadership and capital budgeting decisions focussed on the long term interest of the firm.
Consistent Cash Flow Growth: At least 10% annual average cash flow growth.
High Returns on Invested Capital (ROIC): Minimum ROIC of 20% over the medium term.
Ideally companies applying the concept of Scale Economics Shared i.e. companies that commit to sharing scale benefits with all stakeholders—customers, employees, and shareholders alike.
These companies are very rare. We aim to find them, understand them, and acquire them well below what they're truly worth targeting a 18% IRR. Our reach is global, but limited to listed equities.
Exploit the Heuristic Bias
We look for companies that have it in their genes to grow strongly for 10 to 20 years. Most fundamental analysts will incorporate a heuristic component into their valuations, where growth is assumed to decline after five years. This systematically undervalues long-term compounders and growth stocks. The companies we identify should have the ability to continuously surpass these long-term market projections.