Investing
Our goal of long term capital growth is shaped by the following simple tenets:
Shares are a claim on the ownership of businesses, not merely an object to be traded
That businesses have a fundamental value
We aim to buy great businesses at reasonable prices - and then be patient
For any investment operation to be successful, not only does it need to generate a satisfactory return but - implicit in this outcome - it must also have regard for the protection of the principal invested.
We consider the most effective mechanism to protect the value of our capital, is to invest in businesses that are displaying growth.
This growth will not only help defend against the many moving factors that go into any company's valuation, but it will also provide the opportunity for satisfactory returns to be achieved.
Investing in companies that display durable growth characteristics also provides a scalable and sustainable approach to investing, given BSC's preference for long dated investments.
However, with BSC also being heavily shaped by Value Investing, our approach is proprietary, built on understanding the earning power of the organisation's assets, how durable this earning power is and what a fair price to pay (that provides a margin of safety to our initial capital value) would be.
With an investment horizon that matches the earnings horizon of a business, BSC can exploit short term price movements - knowing that our investment performance will be determined by earnings performance.
Measuring Performance
Measuring our performance against a constant 10% annual return gives us the advantage of:
(i) Patience - as BSC knows what the benchmark will be next year, the year after that and indeed what it will be many years into the future, investment decisions can be made on much longer time frames.
(ii) Originality - given BSC is not being benchmarked against the market, it is not then compelled to mimic the market, in terms of composition and valuation. This promotes originality in thinking and investing.