Contrarian Value Investing
Contrarian Value As a value-oriented investor, LindeHansen strives to identify situations where the common stock price is not currently reflecting the true earnings potential of the underlying company. Generally these situations arise when a company has fallen upon hard times and the consensus is that recovery is unlikely. This creates an opportunity for LindeHansen to identify changes occurring at the company or within the industry that we believe will enable profitability to return to normal levels. Fundamental research and our proprietary process enables LindeHansen to take positions in these companies, contrary to consensus thought, when detailed analysis supports the case.
Investment Philosophy Our strategy and process are derived from our core investment philosophy which can be distilled into three key points:
- The market is inefficient;
- Long-term profitability is the primary driver of value;
- Value matters.
We believe owning the undervalued equity of companies expected to realize an improving trend in profitability is the best way to generate real returns over time and to control risk. LindeHansen invests directly in the publically-traded common stock of individual companies. Each position in the portfolio must stand on its own merit.
A Word About Risk Though many people define risk in terms of volatility of returns, we prefer to think of risk in terms of the permanent loss of capital. In this context, we are willing to accept short term volatility as long as we believe the intrinsic value of our portfolio companies remains above the current market value. Investors should recognize that returns for our portfolio are likely to be lumpy; at times the Fund may appear out of sync with general market indices given our concentration and tendency to own out-of-favor companies based upon our contrarian point of view. We believe patience will be rewarded with real returns. Our goal is to produce long-term growth of capital and income.