Investing with conviction to outperform in times of volatility and uncertainty

LRT Capital is a long-biased, value oriented and concentrated hedge fund. We look to invest exclusively in companies with sustainable competitive advantages, i.e., “moats”, purchased at attractive valuations and held for the long term. We invest only in our very best ideas – typically 20-25 long positions. 

We focus on moats, management and long growth runways – all three are sources of perpetual inefficiency and mispricing. We are first and foremost focus on the preservation of capital. Only as a secondary objective do we seek to outperform the markets.

WHY MOATS?

  • Qualitative processes are hard to replicate and arbitrage. There is no Bloomberg screen for switching costs or network effects.

  • Understanding a moat requires deep knowledge of a business – hard to achieve in a portfolio of 50+ stocks.

  • The presence of a moat makes the valuation of a business less uncertain and improves risk management.

  • Moats force you to take a long-term view – an advantage when other market participants are obsessed with quarterly results.

Our Research Process

To find investment candidates we perform primary source research and detailed analysis of the nature of competition in the industries the investment candidates operate in. We invest exclusively in companies with strong and growing competitive advantages. Sources of competitive advantage include:

  • Patents, brands, licenses and other types of government approvals.
  • Process or scale based cost advantages
  • Switching cost
  • Network effects

“The first rule of making money is to not lose money. The second rule is to never forget rule #1.”

– Warren Buffett