At MCP, our investing approach seeks to apply the time tested principles of value investing to a select group of companies that we believe also offer compelling long term growth prospects.
The following concepts are central to our investing approach:
Focus on Technology and Anticipating Change
We have a deep interest in learning how technology is impacting the world and changing the competitive dynamics of many industries. It is our goal to apply this intellectual curiosity to our research in ways that will provide us a competitive advantage over investment approaches that are overly reliant upon backwards-looking metrics or analysis.
We believe that investors today must be diligent in ensuring that their investment portfolios are aligned with the changes in technology in order to reduce the risk of disruption and value erosion over time.
Independent Research
We source our own ideas and apply rigorous due diligence with an emphasis on proprietary research. We do not rely on Wall Street research and resist the influence of the market in order to build portfolios that we believe offer the potential for excellent long term performance.
We invest in industries that we are deeply familiar with and where we have the highest conviction in our proprietary research. We avoid investment situations that do not fall into the sweet spot of our analytical strengths. We believe in investing in those situations where we think we have an analytical or insight advantage relative to the market.
Look for Superior Risk vs. Reward Opportunities
We look for investment opportunities that we believe offer outsized potential for return relative to the potential downside risks. In some cases, we will utilize options to create positions that will enable us to achieve our desired risk/reward profile by participating in the potential upside of certain investments without exposure to the full downside risk.
Patience and Discipline
We wait for opportunities where our research results in a strongly different view of a security’s likely future value than what is captured in the current market price. We are always looking to exploit our proprietary insights to full advantage, but we often must be patient in waiting for the market to offer us the types of opportunities we seek.
Make Volatility Your Friend
At MCP, we believe that the stock market is highly competitive most of the time, but that human error and emotion often can result in mispricing of individual securities and occasional volatility across the entire market. We believe that successful investors must embrace volatility and exploit the opportunities it provides. As such, we do not believe volatility creates risk, but we do believe that short term volatility can create opportunity. As such, we are willing to accept the risks of volatility in the short term and put our entire focus on building our portfolio for the long term.
Carefully Consider the Downside
We believe in the value investing concept of looking for a “margin of safety” in each investment in the portfolio. To us, this means spending extra time evaluating risk factors and monitoring each portfolio company for signs of deterioration in the business.
Be Aligned With Your Investors
We believe in investing our own money the same way we invest our clients’ money. We want our experience to mirror that of our clients, and therefore we believe there is no better place for the vast majority of our own capital than Martorell Capital.