Owning a business, not a ticker, is at the center of my investment philosophy.
When I evaluate a company, I try to think and act like an owner. I am not looking for excitement or constant activity but for resilience, cash generation, and predictability over decades.
Quality and Cash Flow
Free cash flow is the starting point. I prefer an owner-earnings approach similar to Berkshire Hathaway: operating cash flow minus the capital expenditures needed to keep the business running, adjusted for stock-based compensation and other recurring items.
Reported earnings can be useful, but free cash flow shows how much money actually returns to owners. A company that converts a high share of its profits into cash, year after year, earns my attention.
Predictability and Staying Power
Predictability matters more than growth. I want to understand how a business will look ten or twenty years from now. That is difficult for sectors driven by innovation or structural change, such as technology or energy transitions. In those areas I proceed carefully or stay away.
Businesses that produce essential goods or services, have stable demand, and can adjust to changing tastes are more attractive. Scale, brand strength, and pricing power create a margin of safety.
Balance Sheet Strength
Low debt gives a company and the management team room to breathe. It is also part of the margin of safety. It allows reinvestment when others are constrained and protects against permanent loss of capital. I prefer conservative balance sheets even if that reduces short-term returns. Flexibility is worth more than leverage.
Valuation and the Limits of “Cheap”
Sum-of-the-parts valuations rarely work in practice. I have made that mistake before. The market does not always close the gap between value and price, and if a discount persists for years, it is worth asking why. Often the market is right: complexity, weak incentives, or poor capital allocation can trap value indefinitely.
I would rather pay a fair or slightly premium price for a simple, durable business than hold a cheap collection of questionable parts.
Holding, Not Trading
I have no sell rules. I prefer not to sell at all unless the business or industry has changed in a fundamental way. In my experience, selling a good company has almost always been a mistake. Taxes reinforce that lesson, and you need to find a better business or opportunity to invest that money.
I accept concentration within my equity portion of the portfolio. Individual holdings can influence outcomes more than broad market exposure, and I am comfortable with that. The rest of the portfolio provides diversification across asset classes, and most of it consists of a global equity exposure through an ETF or fund, so my individual equity part can stay focused.
Price, Quality, and Time
Like Buffett’s more recent approach, I would rather own a great business at a fair price than a mediocre one at a bargain. True compounding comes from time in quality, not clever entries.
I hold through cycles and accept drawdowns as a part of investing. The key is to own businesses that can survive and adapt when conditions shift.
Family Ownership and Management Alignment
Tom Russo often says that great companies need the capacity to suffer — the willingness to accept short-term pain for long-term gain. I look for that same trait. The best management teams think in decades, not quarters. They invest through downturns, endure criticism, and focus on compounding intrinsic value rather than optimizing the next earnings release.
Family ownership often supports this mindset. A controlling family provides stability, alignment, and resistance to short-term market pressure. It lessens the risk of activists or opportunistic takeovers that can force strategic decisions for the wrong reasons. Families that have owned businesses for generations usually think in terms of stewardship rather than performance cycles.
Management incentives are another lens through which to judge alignment. I pay close attention to how executives are compensated. Are they rewarded for near-term earnings per share, or for durable growth in free cash flow and return on invested capital? Is their ownership meaningful, or mostly in options that vest quickly?
I prefer management teams who are true owners. When incentives favor long-term value creation and when a family’s capital remains invested alongside mine, the odds of patient decision-making rise sharply.
I dislike seeing good public businesses sold to private equity or dismantled for short-term gain. Companies guided by aligned, long-term owners tend to evolve, adapt, and compound quietly. That is the kind of stewardship I want to be partnered with.
Adaptability and Change
Themes such as GLP-1 drugs raise questions about whole categories of companies. Many investors are quick to abandon businesses exposed to shifting habits, such as alcohol, fast food, or packaged foods. My view is that global leaders like Nestlé or McDonald’s have the scale, distribution, and capital to adapt. They have done it before. Change takes time, but these firms can turn the ship when they must.
Liquidity and Time Horizon
My own portfolio is structured for a long horizon. I can stay fully invested and tolerate multi-year drawdowns without needing to withdraw capital. Managing family capital for people who need ongoing distributions is different, and I have done that in the past; it requires more liquidity and shorter-duration assets. For my own capital, I want permanence and compounding.
Good businesses earn their way through cycles and reward patience far better than any short-term trade.