First and foremost, we are value managers, investing in high-quality companies we believe are significantly undervalued. Our approach is the purest form of value management and centers on understanding the natural behavior of markets and investors. Consequently, we consider the following points in determining the value of potential investment candidates:
Understanding human emotion is key to being successful in the investment management business, since investors tend to overreact in their optimistic views as well as in their pessimistic views. As investors overreact to near-term events, they create overvalued and undervalued security prices in relation to a company’s long-term outlook.