Margin of Safety

We only purchase shares of a company after calculating our best estimate of its fair (intrinsic) value and only when there is a significant discount between a stock’s actual price and our estimate of value. The discount between a company’s stock price and our estimation of its intrinsic value is the ‘margin of safety’. This is an essential element for capital preservation, because we pay significantly less than what the company is worth. As well, returns are enhanced as the margin of safety gap closes.