At T&T Capital Management, we focus on deep value investing principles – on putting our clients’ best interests first for long-term investing. We’re inspired by the likes of Warren Buffett, Benjamin Grapham, Martin Whitman, Bruce Berkowitz, Wilbur Ross, and Seth Klarman.
Our team works with stocks, bonds, options, and all other securities. When taking equity in a company, we view ourselves as a partial owner of the business, remaining fully invested in the company’s success. This mindset allows us to be comfortable with the long-term perspective, since we only align ourselves with management structures that have their shareholders’ best interests in mind. In measuring the quality of an investment opportunity, we pay careful attention to key measures, such as return on invested capital, free cash flow generation, and leverage ratios. We make strategic decisions with our stakeholders’ best interests in mind.
Understanding the intrinsic value of a security is at the core of our approach to the market. Leveraging our years of experience and expertise in the industry, we determine a security’s intrinsic value and then set out to purchase it at a substantial discount – typically 50-60% below the intrinsic value. This ensures an adequate and reliable margin of safety.
Instead of getting blinded by the amount we can earn from an investment, we mitigate risk by first focusing on how much we could lose. We measure risks in absolutes, as opposed to relatives. If the market is has turned away from our favor and we can’t find good investment opportunities, we would rather sit on cash than make poor investment choices. This is how we not only build wealth, but protect the wealth we already have.
The chart above covers the performance history of T&T Capital Management (01/01/2012-12/31/2016). The performance numbers are comprised of all accounts held at TD Ameritrade which were funded and managed by T&T Capital Management beginning January 1st, 2012.No accounts funded after January 1st, 2012 are included in the above calculations. Performance information quoted above represents past performance and does not guarantee future results. The investment return and principal value of an account invested by T&T Capital Management will fluctuate so that when redeemed, the account may be worth more or less than their original cost. Current performance may be lower or higher than the performance information quoted above. Performance figures assume reinvestment of dividends and capital gains. Any questions you may have, including most recent month end performance, can be answered by calling Account Services at 949-734-4290. The S&P 500 Index is a broad-based measurement of changes in the stock market, is used for comparative purposes only, and is not meant to be indicative of T&T Capital Management’s performance, asset composition or volatility. Given the wide scope of securities held by the S&P 500, it should be inherently less volatile. Our results may differ markedly from those of the S&P 500 in either up or down market trends. The performance of the S&P 500 is shown with all dividends reinvested into the index and does not reflect any reduction in performance for the effects of transaction costs or management fees. Investors cannot invest directly in an index. All T&T Capital Management fees are included in these calculations; calculations are net of all fees. Calculations are based on all accounts managed by T&T Capital Management at TD Ameritrade
When evaluating investment opportunities, we begin with the balance sheet, as opposed to the Wall Street approach that has a primary focus on the income statement. The balance sheet tells the story of a company’s liquidity, and it filters out the quality of both its assets and liabilities. This is where we begin to find answers to our biggest questions about the company’s capital structure and, potentially, its liquidation value. We evaluate inventories and company-owned real estate to determine an appropriate net asset value, establishing a clear view of the business’s worth for its owners.
Next, we look at the statement of cash flows. This allows us to gauge the quality of earnings the company is generating. We believe it is imperative to follow the cash to see true value of a company without running the risk of depending on earnings data on the income statement, which could easily be manipulated by various factors. Companies that are generating strong free cash flows tend to have a higher quality earnings stream.
On the income statement, we look for revenue and earnings trends. We recognize that some companies may show growth, but that the growth may not actually be profitable. Other companies may be shrinking, but becoming a more profitable and viable operation in the process – an attractive position, in our opinions. Also taking into account a company’s tax situation and accounting practices, we require a deep understanding of both the company’s financial circumstances and management structure prior to making any investments.