Investment Philosophy / Strategy

 

Investing is part art and part science.

Investing involves both qualitative and quantitative analysis of information and data. As a result, investment management is partly a craft business, where the human element cannot be easily replicated. Symons® Capital adds value through a well-developed, disciplined, intellectually independent, qualitative and quantitative investment approach founded on what can be described as inference reading – developing forward-looking economic, market and stock inferences from known data and extensive information analysis. This work is both quantitatively and qualitatively intensive, but well worth the effort.

At SCM, we consider ourselves to be risk managers. We strive for both long-term absolute returns and relative returns above benchmarks with a focus on risk-management and downside protection to build durable wealth. We always seek to invest without taking too much risk. We always seek to buy stocks with limited downside vulnerability.

Frank, Josh, Colin and Rich

When valuations are cheap, we often may be able to buy stocks with limited downside vulnerability in every economic sector. But when stocks are expensive there may be sectors (such as technology in 2000 and financial services in 2008) that expose wealth to excessive downside vulnerability. When this occurs, we are willing to have less or even zero exposure to some market sectors. One of our primary goals is to minimize losses. We are recognizing the reality of market risk (and managing that risk in order to preserve capital and build durable wealth) so that we can take advantage of better valuations when opportunities arise. When there is a lack of investments that satisfy our criteria for sensible valuation risk and return possibilities, cash may build as we await better opportunities. We are not afraid to hold cash when it makes sense. Cash, or liquidity, is the residual of investment opportunity. We do not begin our investment research with a particular cash level in mind. Thus, cash levels are a residual of actually having a disciplined investment process to which we adhere. For SCM, we use cash as a risk management tool.

In a nutshell: We seek to preserve capital and accumulate durable wealth without taking unnecessary or imprudent risks.