philosophy and process

We are first and foremost value investors. We are intrigued by the global swing by asset managers towards value investing, in the aftermath of the TMT bubble and the massive out-performance by value over growth, but we are not perturbed by this, as we have all proven our mettle by adhering to our philosophy during the difficult times for value investors in the late nineties. As true value managers, we believe that learning certain financial techniques does not suffice; one must be psychologically committed to the style.

We are devotees of the literature that provides empirical evidence of the difficulty most investors encounter when trying to resist darlings and to embrace dogs.

We are abjectly aware of our future fallibility and frequently remind ourselves of our painful past failings. Together with a constant awareness that the funds belong to our investors and are not academic experiments for us to hone our skills, this means that we will always defer to the virtues of diversification. Our company's name was chosen to represent this. (Orthogonality is the mathematical property of independence in many dimensions. This is the portfolio equivalent of not placing all one's eggs in one basket).

All of the above applies to equities, but because the natures of many listed companies' businesses are widely known, fear and greed assert themselves more frequently than in most other asset classes. Media reports often become frenzied and investment perceptions very skewed. Valuations become overly optimistic on recent good news flow and overly discounted on recent bad news flow. Dispassionate investors are able to remain objective and to exploit these frequent episodes.