Our Philosophy

Long-Term Time Horizon

When investing in the stock market, we believe the amount of time you are invested is more important than timing the highs and lows of the market. This long-term approach allows us to invest in businesses as true owners, rather than speculate on them as traders. We think of ourselves as patient capital allocators, whose investment decisions are not determined by short-term quarterly earnings. We view this as a big advantage in a world where most investors have become very short-term oriented.

Disciplined Fundamental Research Investment Approach

Sierra Madre Partners is devoted to a bottom-up fundamental research process. We try to understand the following aspects of each investment:

1. What does the company do and how does it make money?
2. What is the company’s competitive advantage and is it durable?
3. Is the stock price undervalued or overvalued?
4. What is the quality/background of management?
5. Is the company in good financial standing?
6. What is the quality of revenue/earnings?
7. How large is the market opportunity for the products/services?
8. What does the competitive landscape look like?
9. How strong are the cash flows of the business?

Managing Risk/Embracing Volatility

We define risk as a permanent loss of capital and volatility as fluctuations in price. Managing risk is pursued by a) making sure we have done our homework on the companies in which we invest and b) diversifying the portfolio to prevent any one investment from being too large. The stock market tends to fluctuate between euphoria and pessimism, which causes stock prices to move independently of company-specific business fundamentals. Because we embrace volatility, we can capitalize on this phenomenon.

Keeping Things Simple

 At Sierra Madre Partners, we live by the motto “Keep It Simple Stupid” (KISS). We apply this by making investments in companies and business models that we fully understand. Our team has an extensive background in analyzing and investing in the tech, media and telecom and consumer sectors. This allows us to identify key factors and trends that often determine the success or underperformance of a business. We try our best to avoid the condition known as “paralysis by analysis”. We always pay attention to the drivers of the business and financial statements of our investees, but we do not build unnecessarily complex financial models. In our view, too many investors try to outsmart the market and over-manage their investments by using derivatives, leverage, shorting stocks, complex trading algorithms, and investment strategies that they can barely explain much less execute. In short, we like to invest in high-quality companies at attractive prices and hold them for a very long period.