"If you are going to be a great investor, you have to fit the style to who you are."
--Dr. Michael Burry, neurology resident turned value investor extraordinaire, 2010
In his celebrated book Security Analysis, the legendary Benjamin Graham wrote, "An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative." Clients of Peregrine should understand that we are investors, not speculators. As such, we concern ourselves with preservation of capital, and we focus on long-term real returns (after-inflation).
We subscribe to active investment management where portfolios are built one company at a time. We believe that investment decisions should be based on economic merit determined by a rigorous, bottom-up analysis of company fundamentals. We are concerned with how market price relates to business valuation, and in the long run, we believe that true value will be reflected in the stock price. Therefore, we look to acquire an ownership interest at a price below its value, and then we patiently wait for price to grow into value.
We should make clear what we don't do. We are not traders or market timers. We do not purchase or sell securities based on price momentum. We do not utilize technical analysis. We are not passive managers that invest in broad indexes. We do not base investment decisions solely on the current macroeconomic climate. We are not attracted to assets that don't produce cash flow and whose worth is only what some purchaser will pay. We do not like the risks associated with leverage and short-selling. And, we do not chase performance.
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