Our Approach

A disciplined approach to investing

Our disciplined and repeatable investment process is designed from the start to be long-term oriented with low turnover. Our process is not constrained by style-box mandates, asset-allocation pie charts or even a requirement to be fully invested when no better opportunities exist. Our ultimate advantage is our flexibility and the power of compounding over a long-term time horizon.

Our investment philosophy is founded in our fundamental analysis of companies that meet our strict investment criteria, such as market leadership in an attractive industry protected by high barriers to entry; robust free cash flow generation and a healthy balance sheet; a shareholder-friendly management team with skin in the game; strong sales growth with opportunities for margin expansion; and consistently high returns on invested capital. While we have a global focus, we implement our strategy through U.S.-listed securities.

“We strive to build a concentrated portfolio of our best ideas in order to add the most value through stock selection as studies show more concentrated portfolios tend to outperform over time.” -- R. Van Ogden, CFA

We believe that these characteristics, coupled with stringent valuation discipline, will generate attractive long-term returns for our clients. As contrarian investors, a market misunderstanding, overreaction or controversy which we believe is unwarranted often provides us an entry into a high-quality company at a great price. We strive to build a concentrated portfolio of our best ideas in order to add the most value through stock selection as studies show more concentrated portfolios tend to outperform over time.

Just as medical students pledge to “first, do no harm,” our first priority is capital preservation, protecting your assets from painful setbacks. We do this by creating a margin of safety in buying high-quality stocks below what we believe to be fair value, establishing new positions slowly and building them incrementally over time, and being unconstrained in our ability to hold cash when more attractive opportunities are scarce.

Our Risk Management Discipline

Our strong sell discipline also serves as an important part of our risk management process. We believe in recognizing mistakes quickly and tend to sell losing positions early while letting our winners compound, with no upward bound on position limits due to outsized growth. Because of our desire to remain concentrated, existing holdings compete for capital with new ideas and we will sell a laggard in the portfolio to make room for a new position if we believe it to be more attractive. Finally, in our endeavor to produce the best possible after-tax return, we will sell to harvest losses when possible.

Family Office Services

For clients who choose to utilize our family office services, we take on the day-to-day hassles of bill paying, insurance review and payment, and coordinating with other professional service providers like lawyers and accountants.

Meet Our Team

Our team’s broad-based experiences and credentials provide a high level of expertise that allows us to better serve all of our clients’ needs.

Penn Davis McFarland Group Photo

Registered Investment Advisor - Since 1977

Discretionary Asset Management

Discretionary Asset
Management

Equity Investments

Equity and Fixed
Income Investments

Family Office Services

Family Office
Services