Value Investing Through a New Lens
"All truths are easy to understand once they are discovered; the point is to discover them"
- Galileo Galilei
Eppur Si Muove ("And Yet it Moves")
Galileo Galilei, a scientist, mathematician, and astronomer, is widely recognized for his contributions to our understanding of the solar system. Although he did not invent the telescope, he improved its design using a lens that magnified objects up to 20 times. This new and improved telescope led to several key discoveries in the universe including four of Jupiter’s moons. Controversially, Galileo’s research theorized that the planets in our solar system revolve around the sun. This contrarian view led to accusations of heresy and threats of prosecution by the catholic church. Nonetheless, Galileo remained steadfast in his conviction supported by the weight of his evidence rooted in mathematics and logical reasoning.
We at Galileo Value investors, LP have developed our own lens to scope the investment universe. We focus only on the most exceptional businesses in the world with strong returns on capital employed, sustainable growth, and long-term, shareholder-focused management teams. Our highly selective approach, typically involving only 5-15 investments, ensures that we allocate capital to our highest-conviction ideas, balancing risk and reward. We use a deep evidence-based approach to research rather than take wide held beliefs by the market at face value and chase trending themes. At the same time, our disciplined approach to valuation is a key factor in constructing our bottom-up portfolio. Conviction in our research allows us to increase weights in the portfolio when discounts to intrinsic values widen.
Opportunities to invest in exceptional businesses at a significant discount are rare. As such, we believe a highly concentrated and long-term approach is required take advantage of dislocations in the markets from short-termism. We don’t believe in diluting returns for the sake of diversification. We view diversification as a luxury, not a necessity, so we will avoid adding exposure to any given geography, industry, or market cap size just to mimic a benchmark. Instead, we focus on absolute returns driven by bottom-up stock selection from our proprietary global all-cap universe. We will always prioritize performance over assets as we are a privately owned fund that invests our own capital alongside our limited partners. All our attention is focused on one global all cap fund which we intend on closing in the future to stay nimble and agile.
