Investment Philosophy

We are pretty traditional in our approach toward security analysis. We are always looking for the best of all worlds—growth stocks at a value price. While this is ordinary stuff in this day and age, we have tried here to approach the subject from a slightly different angle, and emphasize analytical concepts that are not traditional.

For over 14 years, Losch Management Company Inc. has used the philosophy outlined here to achieve returns for its customers that substantially exceed the appreciation of the market indexes (see Performance History). Currently we do not have a customer who has under performed the S&P in any of the periods of one year, three years, six years, ten years, or fourteen years.

Security analysis is not rocket science. Modern portfolio theory is an attempt to apply mathematical certainty to crystal ball gazing. It may be intellectually comforting, but in the real world the consequences can be expensive.

Easy money generates poor returns and high risk for investment capital. Hard money means good returns and low risk.

The most important single component of the valuation of a business is defining a competitive advantage. As we said above, we want the business to have a big wide moat around it to keep competitors away, and we would prefer that this moat be full of alligators and poisonous snakes.

What is the best way learn about managerial character? It is about watching what they do, not what they say. Watch what people do, not what they say they are going to do. Most managers know what to say. They all say that they are shareholders, friendly, but you have to read between the lines and study the deeds to know if they really believe what they say.