In simple terms, we strive to invest in commodities for less than they are worth out in the open market. If our hard-working analysts can understand the fundamentals of a given commodity, we can tell whether the price the producer is offering is cheap or expensive relative to the inner value of the commodity but we also analyze the specific commodity relative to the specific business it is used in.
Impressive investment opportunities often emerge when investors place a lot of emphasis on short-term developments at the expense of long-term fundamentals. Taking advantage of excessive pessimism is the core of our investment philosophy. We believe that prices must finally reflect the inner value and we are prepared to wait patiently until our investment strategy plays out. We recognize that even the best traders tend to be wrong about 40% of the time, so we seek to mitigate permanent losses of our clients’ capital when this occurs.
It is a straight-forward philosophy to grasp, but also difficult to put to work. We have purposely structured the firm to enable us to make decisions that are consistent with this philosophy. This includes an alignment of interests with clients, a culture of individual accountability and a focus on sustainability.