Check Capital avoids making buy and sell decisions based on economic forecasts, popular opinion, hunches or emotionalism. Furthermore, we make no attempt to predict the market’s immediate direction (i.e., “time the market”), an impossible task. Instead, our investment gains come from identifying and owning undervalued businesses capable of consistent, long-term growth.
Although we don’t try to predict short-term stock-price movements, we do exploit price changes after the fact. The reality is that a company’s share price will often fluctuate to much greater extremes than the underlying value of the business itself, as investors continually (over) react to company news, market oscillations and reports on the economy. This volatility provides us with exceptional opportunities to buy stocks for less—sometimes far less—than what a knowledgeable buyer would pay for the entire business in a private transaction.
We protect our clients by applying a margin of safety: purchasing the stock only when it’s selling for less than conservative estimates of intrinsic value. This lowers downside risk and also improves upside potential.
Check Capital takes the long view. Patience is a key tenet underpinning our investment philosophy. We’re patient in waiting for attractive opportunities to arise and patient in holding great companies that are capable of appreciating over time. Equally important, we persevere throughout the market’s periodic downturns.