Value investing is the art of buying assets for significantly less than the true “intrinsic” or business value to a rationale purchaser. We seek to realize competitive returns over full market cycles with a strong focus on absolute returns.
A consistent, sustainable investment process is vital to weathering all economic climates. The strength of our investment philosophy is based on an unwavering commitment to investing in quality businesses.
We believe these quality companies possess sustainable competitive advantages, creating value as profitable businesses that can, over time, provide attractive returns with less risk than the overall market.
"We are long-term value investors who buy high quality companies with solid growth potential at bargain prices."
- Brian Mark
We Buy a Business, Not a Stock
We approach investing in publicly traded companies as if we were buying the company and current management.
We think about investing as the purchase of a business
Watch the business, not the stock!
Utilize a sufficiently long-term time frame.
If you had to hold a purchased business for five years, what would it look like? Favorable long-term prospects?
Acknowledge volatility does not equal risk.
Price is what one pays but value is what one gets. Sell Discipline.
Great ideas are scarce; be willing to hold cash.
Patient Opportunism – Let the market work for us.
Buy below the company's intrinsic value
We buy partial ownership of companies in which we have a good understanding at prices significantly below their intrinsic value. Is the company’s stock cheap? Is there a margin of safety?
Selecting a good investment philosophy is critical. However, successfully executing the philosophy creates attractive investment returns. Our success depends on our patience and discipline to only invest in situations that meet our criteria. We start with the total universe of publicly traded companies and narrow our search as follows:
We believe the basic advantage of investing via the stock market is the ability to wait for the perfect opportunity; There's no penalty for waiting. Eventually in an emotionally charged auction arena - with extreme short-term pressures - you will get opportunities to make intelligent investments.
Warren Buffet compares investing to a baseball game with no “called strikes.” There is no penalty for waiting for your perfect pitch. The goal is not to have the most home runs or hits, but rather to have the highest “batting average”- measured as a part of all investments made. Because losses can be very costly, the highest batting average, not the most hits should correlate to the best returns.
St. James is a Long-Term Focused Investment Firm
Long Term Focus
Short Term Returns
We view the stock we purchase as real ownership in a business. We approach each investment as if we were buying the entire business at the current price and retaining management. We believe this “owner mindset” helps us make rational and intelligent long-term investment decisions in a market obsessed with short term stock price performance.
The average investor’s get-rich-quick mentality and stock-picking overconfidence causes them to gravitate towards riskier stocks, whereas high-quality stocks tend to be left behind and perpetually under priced relative to their dominance and predictability. We, therefore, adhere to our disciplined, strategy described below.
Enduring pricing power
long-term volume growth
We Invest In Global Champions
- Deeply entrenched in the economic system
- Globally-networked brand or service
- Geographically-diverse revenue streams
- High market share
We Invest In Enduring Pricing Power
- Earn sustainable and predictable high returns on tangible assets
- Have difficult to replicate competitive advantages, making them immune to disruption
We Invest In Long-Term Volume Growth
- Long runway of reinvestment at high rates of return
- Benefits from the growth in the global middle and upper classes
- Benefits from urbanization
- Pricing power combined with volume growth means they will be indexed to GDP growth or better
We Invest In Ownership-Minded Management Teams
- High family, founder, or other insider ownership
- History of treating minority owners fairly
- History of wise capital allocation decisions
- Proven track record of ignoring short-term Wall Street pressures
- Focus on aligning employee incentives with owners (principal-agent problem)
WE INVEST IN CONSERVATIVELY CAPITALIZED BUSINESSES
- Can survive or even thrive in a deep recession
- Possess financial flexibility to fend off new and existing competitors