Check Capital buys and sells stocks with a business-owner mentality. Indeed, Benjamin Graham (the legendary investor and teacher of Warren Buffett) pointed out that “investing is most intelligent when it is most businesslike.”
Therefore, we seek to purchase easy-to-understand businesses with predictable earnings. Typically, such companies operate in mature industries with slow rates of change and sell products or services likely to remain in high demand for the foreseeable future.
Moreover, we look for these companies to possess an enduring competitive position—that is, staying power—enabling the businesses to generate stable cashflow and high returns on capital over the long run.
CCM also tries to invest in companies with accomplished, shareholder-friendly management teams. These firms are often led by long-tenured executives, many of whom maintain a sizeable ownership stake in the businesses. This means their interests largely align with ours and those of other shareholders, providing an incentive for greater returns.
Given how numerous and exacting these stock-selection criteria are, few stocks meet our standards. The result is a focused portfolio, typically holding shares of 15-to-25 companies.