To put it simply we focus on great people and products. When considering an investment we think about how important the company is to its customers. Ie what can’t you live without, what products do you really like or need? We also focus on owner oriented management with a preference for founder led firms. The reason is simple for these managers the business is their life it’s not a job. This ownership mentality is a partnership we prefer rather than employed corporate management.
What can’t you live without? The toothbrush test
The companies we look for have large markets with a product or service that customers can’t live without. Google is an example Google has become the verb for searching the internet any internet user couldn’t imagine life without it. Like Google we try to employ their toothbrush test in that we prefer products that are large enough and meaningful enough to be used twice a day like a toothbrush. Companies that provide must have or well liked products or services tend to have pricing power and generally are less reliant on the macro-environment for growth.
Another example is Visa the card and electronic payment network. It’s pretty hard to imagine a world without it. Visa is a beneficiary of long term trends like e-commerce (can’t use cash online), mobile and also growth in emerging market consumption. With benefits like tap and go and increased internet purchases Visa is becoming more and more useful to its customers.
Philosophy based on founder led firms with large growth opportunities
At Decisive we don’t invest based on the economy but in people and products. We have a bias for founder led firms for these managers it’s their life it’s not a job. We also have an appreciation for billionaire led firms these people tend to have the connections and power to get things done that ordinary managers could only dream of.
We invest in companies with a combination of great management, products and growth potential.
These businesses tend to be the leading companies of their field. Ie the best known brands that customers can’t live without.
Have substantial opportunities for growth, ie have the ability to expand their product range and access growth in international markets.
Employ owner oriented management (preferably founder led firms and management with large equity stakes). For these management teams the business is their life its not a job.
At Decisive our portfolio will be concentrated owning between 15-35 stocks.
Just like the companies we invest in we allocate our capital towards the best opportunities, with the goal of owning the best companies not the most.