If there is one thing to understand about how we do business at Intrepid Capital, it's this: we are committed to the constant pursuit of value. This means that we look for the best value investing ideas with the goal of participating in the upside when markets rise while seeking to protect capital on the downside. For our clients this strategy fosters the confidence of a financial partner that is dedicated to their long-term goals.
The Power of Patience
Finding value takes determination and rigorous research. Then it's all about patience. Patience is a rare commodity in the investment advisory business but we practice it tirelessly. Markets can be irrational in the short term. The temptation to diversify for the sake of diversity can derail sound strategies. Investing our own money shoulder-to-shoulder with our clients helps keep our perspective focused on long-term goals, not short-term results.
The Advantage of Independent Thinking
You won't find us following the herd. We pride ourselves on independent thinking. It's about more than number crunching for us. We dig deeply and analyze exhaustively. Our proprietary research is a compass that keeps us on course. We do not rely on sell-side research, which can be misleading and risky. Our extensive and rigorous process for security selection is followed without fail. If an opportunity doesn't pass our litmus test, we will hold cash until one does. We feel that to be fully invested today assumes there will be no better investment tomorrow.
The Discipline of Risk Control
Simply put, our definition of risk is losing money. In the end, growing and protecting our clients' capital is our utmost concern, so risk control is critical. We actively manage risk with prudently diversified portfolios, sound strategies and a disciplined process. We try to control risk by ensuring that we understand a business's operating characteristics, cash flows, and balance sheet, and then waiting to buy shares until we believe there is at least a 20% discount to our fair value estimate. On average, we tend to own shares in businesses with more stable end markets and without highly leveraged balance sheets; ones where management has a substantial stake, there's little debt and the products are indispensable. These can usually be valued with a higher degree of confidence. This risk control process helps us participate in up markets and attempts to protect capital in down markets.