U.S. Mid-Cap and Large-Cap Issues
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 | We seek to buy excellent business franchises at an attractive valuation and then hold that
position for the long term — often three years or more
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| To us, excellent businesses are defined by growth (mid teens or greater), profitability (high
return on capital), and free cash flow (excess cash generated after making necessary
investments in the business)
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| The valuation the stock market places on a business tends to be much more volatile than the
underlying business franchise itself
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| We use a contrarian approach to buy these great businesses when anxiety depresses their
valuation. Then investors can benefit from both the return to a more normal valuation and the
long-term growth of the company
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| Our focus is on buying specific great businesses at an attractive valuation, not on matching
the industry diversification of some index |
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U.S. Small-Cap Issues
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| We consider only rapidly growing small companies that have already turned profitable. We do
not invest in concepts
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| The net income of these companies has not yet grown to the $50 million threshold for our
mid-cap issues |
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International Stocks
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| With the same approach used for U.S. mid-cap and large-cap issues, we invest in the
developed markets of Europe, in Japan, and in the rest of Asia
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| We typically invest 20-25% of a global portfolio in non-U.S. markets
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| We do not limit our investments to ADR's. We frequently buy shares in the local market
before a stock has become popular enough to justify an ADR in the U.S. We are licensed to
buy local shares in Korea and Taiwan, which have restrictions on foreign investors
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| We make all the investment decisions ourselves and do not rely on sub-advisors |
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Chinese Stocks
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| Mainland China, Hong Kong, and Taiwan are increasingly integrated into one economic bloc,
called Greater China
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| We have managed portfolios dedicated to Greater China stocks since 1996 |
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