Investment Philosophy

Sergeoh Capital can be thought of as a boat sailing crossing the ocean. We cannot control the wind or the waves, but if we follow our compass and stay the course, we should eventually reach our destination. Our compass is our investment philosophy:

1. Quality – We want to own the best businesses, regardless of size. We have both micro-cap and mega-cap companies in our portfolio.

2. Value – We only make purchases when prices are attractive relative to the company’s intrinsic value (i.e., when there is a margin of safety).

3. Inactivity – We aim to minimise turnover and let our businesses do the compounding. In a perfect year, we would not need to sell anything.

4. Opportunity – We keep a watchful eye for opportunity and will invest in cyclical industries, such as real estate and energy, and special situations.

We typically hold 10 to 15 stocks, weighted based on conviction. Our job is not to be smarter than everyone else, but to just be not stupid. If we can be consistently not stupid, we should come out okay. Our edges are a long-term time horizon, patience, discipline, relative inactivity and a very low cost structure.

As our fund is fully invested in stocks, volatility is expected: there is always a possibility that our fund will be down 50% or more next week. Our goal is not to minimize short-term volatility in the fund or to beat the market in any given year, but to turn one dollar into ten dollars, hopefully in 20 years or less. To do this, we need to accept volatility as the price to be paid for our returns.

It has been said that it is the journey, and not the destination, that matters. This is worth bearing in mind, since we can control some aspects of the journey (such as the investment process), but not the destination (i.e., the investment outcome). This probably sounds strange since we are, after all, in the business of compounding wealth. But that is why we have the anchor in our logo—to remind us to stay anchored to the things that truly matter in life: faith, health, relationships, and values such as integrity, excellence, resilience, humility, and continuous learning.