We believe that, over time, the best way to protect and build a family’s capital is through the long term ownership of excellent businesses.  A profitable, well-run business will grow in value over time and, if purchased at an attractive price, will provide a superior return with less risk than active trading in stocks. 

What distinguishes us from other investment managers is that we buy publicly traded stocks for our clients as if we were buying a piece of a private business.  Before purchasing excellent companies in the public stock markets, Manitou takes the time to understand the business and assess the competence and integrity of its managers.

An excellent company will have most of the following criteria:

• Predictable prospects over the long term
• Strong financial position with little debt
• Consistently growing cash flow in excess of that required to maintain the business
• High returns on net invested capital
• Effective, honest and shareholder-oriented management

We will purchase shares of a business only after we have a good idea of the true economic value of the company and only if the market offers shares of the company at a substantial discount to the true value.  This provides a margin of safety.

We expect to own our investments for the long run.  This has the advantage of postponing the payment of capital gains tax so that the full amount invested is compounding for our clients’ benefit.

A sale of shares will be considered if:

• a significant adverse change occurs in the nature of the business, its competitive environment or its management,
• the market price substantially exceeds our estimate of the company’s true economic value, or
• an investment with a significantly better risk/return profile presents itself.

At any time the number of excellent businesses available at an attractive price is reasonably small.  Consequently, it takes patience to build a high quality portfolio, and our portfolios tend to be fairly concentrated (typically 15 - 20 companies).

While building the desired portfolio, we are content to hold treasury bills.

Many of our clients’ portfolios contain bonds as well as equity investments. We purchase only the highest quality issues – principally Government of Canada bonds.

If you would be interested in knowing more about our investment philosophy, please click on the Big Ideas tab to access papers such as Building Family Wealth in which we discuss our investment philosophy in more detail.
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