At St. James we best describe our investment process as a long-only approach to absolute-return investing. Our hope is that this characterization appropriately conveys our emphasis on risk. We feel strongly that protecting capital on the downside – thereby not interrupting the compounding process – is the key to outperforming benchmarks over the long-term. Historically … Read more
In Michael Lewis’ Moneyball, the Oakland A’s took a critical look at the role of the statistics generated by the baseball players they evaluated. By questioning convention, A’s management noted that some statistics better represented an individual player’s skill. For example, On-Base-Percentage was a far better indicator of a batter’s ability than Batting Average, which … Read more
We updated our estimate of fair value for each company in the portfolio. Based on our estimate of fair value relative to the company’s current stock price, we determine the company’s current margin of safety. We aggregate the individual company margin of safety based on composite weight within the Core Equity portfolio to determine the … Read more
Each quarter we update our estimate of fair value for every company in our portfolio. Based on our estimate of fair value relative to the company’s current stock price, we are able to determine the company’s current margin of safety. We aggregate the individual company margin of safety based on composite weight within the Core … Read more
Our process at St. James necessitates that we are constantly revisiting our calculation of fair value, and the corresponding marging of safety, for each position in our portfolio. On an individual security basis, we compare this discount with our required margin of safety before commiting client capital to a company in the portfolio. After we … Read more
Each quarter we update our estimate of fair value for every company in our portfolio. Based on our estimate of fair value relative to the company’s current stock price, we are able to determine the company’s current margin of safety. We aggregate the individual company margin of safety based on composite weight within the Core … Read more
A new account being invested today in our Core Equity strategy would still hold 26.5% in cash. Valuations determine the level of cash within our portfolios. The margin of safety relative to our estimate of fair value is what drives our individual company position sizes. Each quarter, we reevaluate and update our estimate of fair … Read more
The S&P500’s current P/E ratio of 14-15 would look reasonable if one makes the assumptions that the economy will grow over the next 12 months and that today’s high profit margins are sustainable. However, we have serious doubts that the economy will continue to grow over the next several quarters. In fact, we would not … Read more
As illustrated by the following daily chart, the U.S. Dollar Index has broken below its November 2009 low. However, the 2008 low remains. If the U.S. Dollar Index falls below that level, it would put the Dollar Index at an all-time low. Ben Bernanke, Chairman of the Federal Reserve, appears oblivious to the damage being … Read more
Hyperinflation has been defined as a non-annualized inflation rate of 50% or more in a single month. But do not confuse hyperinflation with the inflation the U.S. went through in the 1970s, which was moderate, by comparison. Unlike normal inflation, hyperinflation has a single cause: It occurs when a government cannot borrow money because its … Read more