Our philosophy and approach reflects an evolution from Tom’s early experiences managing a small investment portfolio for his parents before managing his own investment account. He only invested in a handful of out-of-favor, value-oriented financial services firms at any given time. His success led to the value investing style and concentrated portfolio construction that he still uses today. 6
- We strive to remain within our sphere of investment competency. We have spent our careers immersed in this sector and related businesses.
- Most investors don’t fully understand accounting and operations for banks and financial services companies. When potential problems arise, confusion reigns, and many investors sell. Second Curve views this dynamic as a buying opportunity. We are contrarians at heart, and we strive to separate noise from signal.
- We are unafraid of concentration. We believe holding sizable positions in our best ideas will enhance returns.
- Volatility does not equal risk. Volatility is a natural result of both value investing and a concentrated portfolio. Our approach results in above-average short-term volatility. We have the temperament and patience to weather the short-term and allow our thesis to play out.
- We continuously re-evaluate and make decisions in light of current information rather than our cost basis.
- Ultimately, we believe our in-depth sector knowledge, concentrated approach, and patience in weathering volatility will benefit our long-term partners.
The Secrets of Our Success
“360-degree research” and concentrated portfolios are the key tools we use to earn high returns for our fund investors.
The core of Second Curve’s knowledge advantage is the comprehensive approach we take to investment research. We use and exploit every information source that’s available to us--and we believe we have many such sources that other financial services investors do not avail themselves of. The result is an extraordinarily thorough understanding of the companies we invest In.
Our Financial Objective
- Outperform the S&P 500 over the long term by an average of 5 percentage points per year
- Investment performance that exceeds the S&P Financial Index by an average of at least 10 percentage points year over the the long run