Why We Do It This Way
There are 5 Key Principles to Investment Success:
- Value: Only invest in a quality company trading in the market below its intrinsic value.
- Quality: Only invest in companies that are market leaders, with sustainable business models, with quality management teams with a track record of success.
- Dividend Growth: Only invest in companies that have a strong historical track record of revenue growth, profit growth, dividend growth and strong free cash flow.
- Patience: Invest in quality companies over long periods of time. Don’t be chased out of a position due to short term market fluctuations.
- Concentration: We manage high conviction portfolios, only buying our best ideas.
This approach helps to achieve above average returns over longer periods of time.
Public Markets vs. the Private Markets (also known as Alternative Investments): We follow this same approach when evaluating investment opportunities in both the public stock and bond markets as well as the private markets. NPMC invests in both the Public Markets (the Toronto Stock Exchange and the New York Stock Exchange) and the Private Markets (private pools of capital that provide loans, mortgages, real estate ownership, private company ownership and infrastructure ownership). The public markets provide greater liquidity (investments can be sold at virtually any time) and potentially greater short term upside growth potential, but this comes with also greater short term downside risk potential. By comparison, private market investments provide less liquidity (investments can typically be sold within 60 to 180 days) and can provide a more consistent return year over year (far less short-term changes in value). Private securities may be held directly in the client account, or they may be held within one or more of the proprietary funds or pools managed by BCV or NPMC.
Putting It All Together: A thoughtful blend of both public and private investments, managed based on the 5 Key Principles to Investment Success, helps to gain the best of both worlds: desired returns with less risk.