Back to Guild Capital
As Nicolaus Copernicus, known for his work on heliocentrism and quantity theory of money, said: “to know that we know what we know, and to know that we do not know what we don't know, that is true knowledge”, we do know (and admit) that we do not know everything about investing and businesses.
Our goal is to focus on strategies in our circle of competence (and grow it) for the purpose of providing the highest partner returns over a long period of time, adjusted for risk.
Value systems first
We look to partner only with investors whose value systems, mindsets toward wealth, and philosophy toward long-term investing align well with our own. While most partnerships and funds will focus on aggressively growing their assets under management (AUM), we have no such motivations. If we were to dilute the quality of our partner base in pursuit of rapid AUM growth, we would have eroded our own peace of mind and diverted our focus from our business and research process. A patient investor base gives us the latitude to focus on what really matters over the long haul – a sound investment process, transparency & integrity in our dealings, and healthy long-term relationships and returns.
Don’t lose money
Our long-term success will be a function of the maturity and emotional fortitude of our partners – their ability to conscientiously guard against the harmful impulsiveness which usually manifests itself in times of panic.
Our goal is not superior investment performance but superior performance with less-than-commensurate risk. Mathematically, the more you lose money, the harder it is to get back to where you started. Above-average gains in good times are not necessarily proof of a manager's skill; it takes superior performance in bad times to prove that those good-time gains were earned through skill, not simply the acceptance of above-average risk. Thus, rather than merely searching for prospective profits, we place the highest priority on preventing losses once prospective profits are achieved.
Proactive candor
We will be candid in our reporting to you, both quantitatively and qualitatively. We will strive to share bad (and good) news early. Our guideline is to disclose the business facts that we would want to know if manager and partner positions were reversed.
In contrast, due to good investment ideas being rare, we may decide not talk about specific investment ideas. This ban extends even to assets we have exited (because we may purchase them again) and to interests we are incorrectly rumoured to be buying.
Investable universe focus
Intrinsic value is the all-important concept that offers the only logical approach to evaluating the relative attractiveness of investments and businesses. While there may be different methods people measure intrinsic value such as net asset value, liquidation value, etc, the approach we use to evaluating our business is the discounted cashflow approach - where free cashflows from the business will be discounted at the higher of the weighted average cost of capital or the risk-adjust discount rate.