Investment Philosophy

The investment philosophy of the Advisers is simple: Invest in good businesses at attractive valuations for the long-run. At the heart of this philosophy are two core investment principles.

The first of these principles is the belief that superior long-term returns can only be generated as long as first priority is given to protecting one's principal investment. We find it difficult to make any money from investing if the initial principal has been lost. As a result, we typically seek to minimize the risk to investment principal by focusing our efforts on identifying good quality, defensible businesses with solid financial positions and strong operating track records. It is our belief that these businesses will generally have the greatest probability of continued operational success into the future and represent potentially attractive investment opportunities. However, before investing in these opportunities we seek to further reduce our risk to investment principal by increasing our margin of safety. We feel this is accomplished by investing in these opportunities at valuations that we believe reflect a discount from our estimate of the businesses' intrinsic value.

The second principle is the belief that one must invest in businesses and not speculate in securities to have long-term investment success. This is predicated on the view that the long-term performance of a security will be determined by the operating performance of the underlying business and not the vagaries of fluctuating market sentiment. Adherence to this belief allows us to look through the short term noise of the market and focus on understanding the underlying business and its ability to generate a strong operating performance over the long-run. As a result, we expect to be long-term investors in these businesses. The decision to divest of an investment will generally be driven by either a change in the underlying investment thesis or as a result of the investment trading at an unjustifiably high valuation while more attractive investment opportunities are available elsewhere.

To implement this philosophy, the Advisers utilize a disciplined, bottom-up, value driven investment process. This process is designed to identify potentially attractive and appropriate investment opportunities through extensive fundamental research that analyzes a range of qualitative and quantitative factors. Once an investment has been made, it is monitored and reviewed on an ongoing basis to determine if it remains an attractive and appropriate investment.

Our commitment to this investment philosophy and process is best demonstrated by the fact that all three of the Advisers' portfolio managers, Brendon Fischer, CFA, Joel Looney, CFP and Stewart Horejsi, are fellow stockholders in the Boulder Growth & Income Fund.