Three Nine Investment Philosophy
INVESTING is Ownership
We evaluate the merits of owning a stock from the viewpoint of a long-term owner. We believe short-term trading strategies are speculative in nature.
As owners, we feel that we have a responsibility to understand the activities in which our companies engage. Therefore, we avoid investing in businesses that we may deem harmful to others from a biblical perspective, such as those engaged in the following activities: abortion, pornography, anti-family entertainment, human rights violations, promotion of LGBTQ lifestyle, alcohol, tobacco, and gambling.
We look for companies that we believe have a sustainable competitive advantage that trade at a discount to our estimate of fair value. Our viewpoint is instructed by Benjamin Graham's illustration of Mr. Market from his classic book, The Intelligent Investor.
People Drive Profits
We believe the best companies understand that business is about relationships. They view employees as profit drivers rather than cost centers.
When employees are treated well, they will treat customers better. When customers have great experiences, they tell others resulting in more sales and benefiting shareholders. We believe this creates a virtuous cycle as shown in the graphic.
Paradoxically, we believe that companies focused on people over profits will be more successful over the long-run.
Known for his deep wisdom, King Solomon taught long ago about diversification. "Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land." Ecclesiastes 11:2 (NIV).
We agree that diversification is valuable, but too much diversification can be counter-productive. Therefore, we typically own 20-40 stocks in the portfolio at any point in time. This allows us to be more familiar with the companies we're buying and take larger positions in the ones we feel most conviction about. Academic research has shown that owning a portfolio of 20-30 stocks can diversify away most company-specific risk.
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