For over thirty one years we have been value investors and have applied the same value strategy for both our clients and our own personal accounts. Our proprietary investment research seeks to determine the appraised value of a company. The appraised value, or worth of a company, is sometimes referred to as intrinsic value, private market value, or break-up value.
Investments are then made at a significant discount, normally 40% to 65% below our determination of a company's current intrinsic value. This allows us to buy companies with a margin of safety, as we strongly believe that the price we pay for a company will ultimately determine our return.
By adhering to the principles of intrinsic value and the margin of safety, we practice an investment philosophy that runs counter to the general market psychology. The buying and selling of companies is therefore based on investment discipline, not popular opinion.
To minimize unforeseen events that could adversely affect intrinsic values, we adhere to a policy of broad diversification. Generally, no one issue accounts for more than 1% to 5% of the portfolio assets on the cost side; and no one industry group accounts for more than 10% to 15% of a portfolio's value. When fully invested, the typical portfolio will have approximately 35 to 40 companies whose headquarters are generally based in the United States.
Portfolios are not constrained by market size or capitalization. Therefore, a significant portion of portfolio assets may be invested in small, medium, or large companies with one market capitalization being more heavily weighted over the other at any given time.
Century Management has been successfully using this "value" philosophy and stock selection process for more than 33 years (see Performance) while maintaining significantly lower risk than that of the general market.
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