We invest in companies at attractive discounts to our estimate of intrinsic
value with: 

• Strong competitive moats from economies of scale, intellectual property, network effects, and switching costs that operate in above average industries,
• Balance sheets capable of withstanding significant pressure, and
• Management teams whose incentives are aligned with long-term shareholders.

The strategy tactically short sells to generate positive absolute returns or as part of pair trades targeting attractive relative returns. A basket approach is typically employed to reduce risk. 

We short companies which: 

• Lack durable competitive moats, preferably in below average industries,
• Have unstable cash flows and the potential for balance sheet stress, and/or
• Are poor capital allocators, often with entrenched management teams.

We utilize exchange-traded options to: 

• Generate additional income on the long portfolio via written covered calls, ⊕
• Obtain exposure to attractively valued companies via long call options without risking significant principal,
• Mitigate downside risk to positions in the long portfolio with purchased put options, often using put/call collars as a source of put premium funding,
• Purchase puts as an alternative to short selling in instances where upside risks may be significant, and
• In rare instances, we may write secured puts or put spreads on securities we have a high degree of comfort owning below the level of the strike price.