We believe that a company’s share price will follow earnings over the long run. We therefore focus on identifying companies with fundamental characteristics that often result in generating above average profit growth. We place little emphasis on forecasting the direction of the stock market or the economy because we believe that short-term market gyrations do not affect the long-term prospects of an investment.

We favor investing in companies with:

• high rates of return on equity and capital;
• strong free cash flow;
• a sustainable franchise;
• dominant market share; and
• above average profit margins.