Investment philosophy remains unchanged since the Firm was founded in 1994. Our
fundamental investment approach capitalizes on the overwhelming need for
investors, predominantly professional investors, to achieve short-term results.
This collective, short-term focus can
create long-term price inefficiencies, because rewarding events and outcomes,
even if visible and of large magnitude, that are 3 to 5 years in the future
have little utility to the average manager. This is one mechanism by which
ignored and under-analyzed securities are created. We seek to exploit the
resulting long-term pricing anomalies and unique opportunities in order to
generate above average returns.
Extending the Time Horizon
Superior long-term wealth
is created by investing in companies whose present market valuations ignore
their long-term potential. Horizon Kinetics' portfolio returns are driven by
the long-term returns on capital of companies' underlying business operations
rather than the short-term timing of purchases and sales.
Investing as a Social Science
A thorough understanding of
social sciences (e.g., History, Economics, Philosophy, Sociology, etc.)
provides valuable context and perspective for investment decisions. The
industry's abundant use of emotive words and focus on short-term results can
lead to behavioral biases and sub-optimal, even irrational decision making. It is, after all, a market place, and markets
are a social construct.
Balancing Qualitative & Quantitative
requires the integration of the qualitative aspects of social sciences with the
logical reasoning and mathematical abstractions of physical sciences. The near
limitless amount of quantitative data available in financial markets has
limited value without proper historical perspective, social context and