At VFCM, we target companies with superior business models that can compound value over a multi-year period.
VFCM runs a long-biased equity strategy, which employs a rigorous, bottom-up fundamental approach to find high-quality businesses with strong organic growth, predictable earnings, capital efficiency, and prudent management.
VFCM looks to purchase companies with leading industry positions that can thrive in a variety of economic conditions. This approach reduces the need to market-time around macroeconomic factors, which are difficult to predict in the short term.
VFCM seeks to buy companies that are “compounding machines,” which can grow their intrinsic values over a multi-year period. VFCM generally avoids “cigar butt” stocks, which look cheap but are in fact value traps. These companies lack significant organic growth, and their business quality rarely improves, even in the hands of strong management.
VFCM analyzes companies over a multi-year timeframe and looks beyond current earnings to focus on the long-term health of businesses.
VFCM believes that a concentrated portfolio of high conviction ideas is the only way to significantly outperform relevant benchmarks over the long term. At VFCM, new positions must meet rigorous criteria for business quality, financial metrics and operational standards.
VFCM seeks to manage risk through quality stock selection and not ineffective financial engineering. VFCM believes that risk can be mitigated by emphasizing business quality, seeking a margin of safety, using minimal leverage, avoiding speculative securities, and maintaining a liquid portfolio.