We are long-term investors
Our approach is more focused than usual, rational and strong in terms of substance.
Heissenberger Wealth Management Ltd. follows a value-oriented investment philosophy. In its most basic form, this means that we determine the intrinsic value of a security and only buy it if it is trading at a significant discount to its intrinsic value.
We invest like real business owners.
Stocks are investments in real companies. This is how they should be treated.
We view stocks as partial ownership in a company, not as a fluctuating security. This view enables us to think like long-term business owners and to make decisions in the best interests of the company and our investors.
Behavioral finance findings show that even professional investors often behave irrationally and perceive stocks more as volatile securities than as shares in real companies.
Would the owner of a good company that provides him with solid profits year by year try to constantly sell his company at a high price and buy it back again at a lower price? Would this be a successful strategy?
Market observations show that equity fund managers hold their securities for an average of only two months. If you want to participate in the profits of a company as a long-term investor, it takes time.
Investing is math.
Relying on your gut is not an investment strategy.
With every investment, the investor can assume by means of conservative calculations that his investment amount, plus an attractive risk premium, will be recovered within a reasonable period of time through its cash flows.
Our portfolio companies are growing, achieve high returns on their capital, have low levels of debt and generate high profits and free cash flows, both in absolute terms and relative to the purchase price. A high free cash flow yield is an important reason for our purchase decision. In total, we pay attention to 15 quantitative criteria and perform a qualitative assessment. Each individual criterion suggests that the company is excellently positioned and at the same time undervalued.
We do not engage in speculation on short-term changes in price fluctuations. What we want is a high risk-adjusted return from the company's earnings themselves.
Investment vs. speculation.
When it comes to the capital market, not all market participants are equally keen on long-term profits. There are two different types of market participants: Investors and speculators. To illustrate the difference between the two, we draw on the words of investor legend Warren Buffett:
"What matters is whether it is important to the person that the markets are open. When I buy a stock, I don't care if the stock markets close tomorrow for a few years because I'm interested in the actual business of the company that's going to generate earnings for me in the years to come. But if it mattered to me that the stock markets were open, then I would be a speculator in a sense, because I would be thinking about whether the stock price would go up or down the next day. I would define speculation as trading that is very focused on the price swings of a stock. But you don't look at the company itself and the balance sheet behind it."
