Investing Philosophy
As manager and trustee for the Enlihtan Global Opportunity Fund (the Fund), Enlihtan's investment philosophy is to make concentrated investments in a limited number of companies that are believed to have exceptional long-term business prospects and that sell at what are considered to be attractive prices.
The Fund aims to be predominantly long-only, investing in major developed markets where the Manager has expertise. The Fund may use various derivative instruments for the purpose of entering and exiting positions and for occasional portfolio hedging.
Enlihtan employs a single investment style and implements this across any or all of the Fund’s markets. The Manager employs a research-intensive "bottom up" selection process, the objective of which is to acquire part-ownership of what are considered to be excellent businesses at prices which represent excellent business sense. Although there are many factors contributing to a business’ classification as “excellent”, a core requirement is for the business to have a sustainable competitive advantage. Enlihtan believes that, over time, only a relatively small selection of companies will meet these standards and so, when one qualifies for investment, a meaningful position should be established. Typically, the Fund will invest at times when events that Enlihtan views as transitory in nature have a disproportionate effect on a company’s share price.
Due to the depth of research undertaken on each investee, the Fund’s holdings are strictly limited in number . Enlihtan believes that a concentrated portfolio may well lead to lower risk if it increases the intensity with which an investor analyses a business and the required degree of psychological conviction about its economics prior to making an investment. The typical holding timeframe for a position is several years (or longer) and portfolio turnover is very low. A key focus is always a prospective business’s financial strength – as reflected in the balance sheet – since Enlihtan views this as critical to the survival and earning power of a business. Due to considerable holding periods, there must be a high degree of confidence that companies can withstand industry and/or economic vicissitudes.
The Fund is best suited to those investors who share Enlihtan's view that the share market serves as a distribution mechanism whereby money is moved from the active to the patient. Hence, Enlihtan is committing to comparatively modest management fees in exchange for investor commitment to a longer term investment horizon.
Although the Manager seeks always to be aware of the nature of the financial community’s appraisal of a given market, industry or company, the Manager avoids speculating on macroeconomic themes. In the words of Warren Buffett,
“In our view it is folly to forego buying shares in an outstanding business whose long-term future is predictable, because of short-term worries about an economy or a stock market that we know to be unpredictable. Why scrap an informed decision because of an uninformed guess?”
-Berkshire Hathaway Annual Letter, March 1995