Our investment approach is value-oriented, focusing on industries in which we have considerable knowledge, and emphasizing downside protection and the preservation of capital. We are frequently contrarian in our investment approach, which is reflected in a number of ways, including:
- our willingness to invest in assets and geographies that our competitors typically avoid;
- our experience investing during periods of uncertainty or distress in the economy or financial markets;
- our orientation towards sole-sponsored transactions; and
- our willingness to undertake transactions that have substantial business, regulatory or legal complexity.
We have successfully applied this investment philosophy, allowing us to identify what we believe to be attractive investment opportunities, deploy capital across the balance sheet and create value for our investors throughout economic cycles.
BCI provides investment management where we believe the potential for reward outweighs the risk entailed. All of our investment activities operate according to the unifying philosophy that follows:
- The primacy of risk control
Superior investment performance is not our primary goal, but rather superior performance with less-than-commensurate risk. Above average gains in good times are not proof of a manager's skill; it takes superior performance in bad times to prove that those good-time gains were earned through skill, not simply the acceptance of above average risk. Thus, rather than merely searching for prospective profits, we place the highest priority on downside protection and risk management.
- Emphasis on consistency and the importance of market inefficiency
We feel skill and hard work can lead to a "knowledge advantage," and thus to potentially superior investment results, but not in so-called efficient markets where large numbers of participants share roughly equal access to information and act in an unbiased fashion to incorporate that information into asset prices. We believe less efficient markets exist in which dispassionate application of skill and effort should pay off for our clients, and it is only in such markets that we will invest.
- The benefits of specialization
Specialization offers the surest path to the results we, and our clients, seek. Thus, we insist that each of our portfolios should do just one thing — practice a single investment specialty — and do it absolutely as well as it can be done. We establish the charter for each investment specialty as explicitly as possible and do not deviate. In this way, there are no surprises; our actions and performance always follow directly the mandate prescribed. The availability of specialized portfolios enables BCI clients interested in a single asset class to get exactly what they want; clients interested in more than one class can combine our asset portfolios.
- Macro-forecasting not critical to investing
We believe consistently excellent performance can only be achieved through superior knowledge of industries and their underlying sectors, not through attempts at predicting what is in store for the economy, interest rates or the securities markets. Therefore, our investment process is entirely bottom-up, based upon proprietary, company-specific research.