Growth, steeped in value

At Sims Capital, we invest for the long-term. Our preferred holding period is forever, but at the very minimum, we approach every potential investment with an expected 3- to 5-year holding period. The purpose of holding stocks for such a long time span is to allow premium companies to generate strong profits (and gain from stock price and dividends) and limit tax liabilities by locking in long-term capital gains.

As value investors, we agree with Benjamin Graham's insight that a share of stock is a piece of an ongoing business. As such, we try to understand and value an underlying business before we think about buying the corporation's stock. Once we understand a business well enough and can value it with a high degree of confidence, we are only comfortable purchasing the stock when we can do so at a significant discount from its intrinsic value (the value a third party would pay for the entire business). Buying in such a disciplined manner provides us with a "margin of safety" (in Ben Graham's vernacular)--- this simply means that even if our valuation is a little off (say the real value is only 90% of our estimate) there is still ample room for appreciation. We prefer to buy stock at a 33% discount (a price that is 67% of intrinsic value), although we may go as high as 75% of intrinsic value for platinum quality companies---- firms with strong brands, strong balance sheets, and great growth prospects.

Research and patience are at the core of our investing strategy.