Buying a piece of business
Investments are made with the perspective of buying a piece of a business rather than buying a tradable piece of paper. The focus is on the calculatable underlying value of the business as opposed to the current market price of the stock. If the future cash inflows and outflows between the business and its owners could be discounted back at an appropriate interest rate, the business’ intrinsic value could be arrived at.
Circle of competence
An investor’s best strategy is to select an area where he or she can learn significantly more about valuing the business than the average investor and focus their efforts there. If an investment does not fit within Surefin’s circle of competence, money will not be invested.
Margin of safety in the price
The gap between the value and price of an asset is its margin of safety. Surefin’s strategy is to look at securities wherein their market prices are significantly below their calculated intrinsic value. We will always position ourselves to take advantage of volatility in prices and look to buy cheap and sell close to fair value.