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Guiding Principles

Guiding Principles cropped

a) „Think global, act local”:
Investment decisions have a global impact. Taking successful decisions requires a close look at investments that are easier to achieve for locals. Stüfe & Partner solely invests in securities that have been assessed with a background knowledge equivalent to that of smart local investors, combined with an unparalleled holistic approach. We prefer field research to desk research and don’t hesitate to visit companies all over the world in order to gain first-hand insights. Our attention is concentrated on shares or bonds of companies that benefit from prevailing global developments, or companies with a domestic or regional advantage with limited or no global risk.

b) Value Investing:
Play It Smart Securities with a discount to their intrinsic value and/or a discount to average market valuation (peer group analysis) offer a potential profit by revaluation to their intrinsic value and lower downside risk. Stüfe & Partner invests in shares with a minimum discount of 30% and in corporate bonds mispriced by fixed income traders.

c) Focus On Compound Interest:
Never Lose! Compound interest is crucial for any successful long-term investment. A mere 7.2 % yield per year more than double your investment within ten years. Losses on only a one-year basis can destroy this goal easily. Therefore a strategy is to be applied that avoids any downside risks.

d) Risk Minimization:
Do not just apply the risk-reward ratio but instead a two-step approach for selection of securities.

Step 1: Select only those securities with the lowest risk profile.
Step 2: Among those, pick the ones offering highest yield potential.

Selection criteria include (how much you pay for sales, cash flow, net assets):

  • Market cap against sales
  • Market cap against book value
  • Market cap against cash flow

Mainstream investors typically select securities with a high yield potential, and only in the next step eliminate the ones they deem too risky. This strategy typically exposes your investment to disproportionate volatility/ risks that result in a lower LONG TERM yield (curve) by filtering out securities with moderate yield but low or even no risk. Our strategy is superior in that it builds upon a pool of well-established, reliable securities that minimize risk in the first place, before taking account of global and local developments to pursue the goal of SUBSTANTIAL LONG TERM profitability.

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