Our investment process is based on the view that markets generally price assets correctly but that occasionally there are unique opportunities to invest capital.

In order for us to make an investment we need:

• Clearly articulated argument (investment tenet) around what we perceive is:
  • Creating the opportunity;
  • The difference in our views from the broader market; and
  • The magnitude of the opportunity.
• Some initial confirmation of the investment tenet being realised:
  • This confirmation may come through our own observations or actual financial results.

An investment tenet may be reflected in the portfolio through a single investment, or multiple investments that relate to the same tenet.

Given our background, we are interested in opportunities in the domestic and global markets. The Long Tail Partners No.1 Fund will consider a broad range of securities and asset classes for investment. The individual mandate offering is more concentrated and also focused on opportunities domestically and internationally.

Our sell discipline:

Should we form the view that the tenet is no longer valid, we will exit the position. We are conscious of trying to avoid a “justification mentality” where our original investment tenet is not being realised but we remain committed to the position for what may become emotional rather than fundamental reasons.

From time to time we will get our analysis wrong. We aim to avoid compounding these mistakes by investing large portions of our capital in these positions. Consequently we have a strong preference not to add to losing positions – if an asset price moves materially against us, we think it is more likely we are wrong rather than the investment being even more compelling.