Investment Philosophy

High Quality at a Reasonable Price.

We seek to invest in companies with dominant business franchises and competitive advantages that we believe are durable and likely to persist in the future.

The companies we strive to invest in have proven abilities to survive and prosper through a wide variety of economic conditions. We look for superb balance sheets with low debt. We seek investments that yield high returns on invested capital and offer transparent financial statements through conservative accounting practices. We look to invest when share prices are attractive and we invest for the long term.

We believe strongly that wealth is created by owning the finest business franchises and avoiding those which have underlying weaknesses. Our persistent, disciplined focus on key metrics of business strength and quality has built a portfolio of what we believe to be superior and durable companies.

Portfolio Construction

We typically concentrate our portfolio in the common stocks of a relatively small number of what we believe are the best business franchises available. When we have sufficient conviction in a company to add it to our portfolio, we intend to hold it for the long-term. As a result, our investors enjoy low security turnover and great tax-efficiency.

Like Minds.

The investment philosophies that guide our approach to wealth advisory are drawn from distinct but complementary sources.

Henry H. Armstrong

Henry Armstrong founded the firm in 1983 after serving for years as a trust officer at Union National Bank. In that role, his investment philosophy began to take shape. “We looked at trust investments every week,” he said, “and you could see that the Bank had done a superior job buying quality companies — a slice of America, we used to say — all of which possessed good earnings potential. Eventually, the market rewarded these superior companies and our trust customers benefited financially. So, when I started our firm in 1983, my fundamental belief was that the price of a stock was somewhat less important than the quality of a company. We were, in other words, far more interested in the underlying value of a business than we were the price of a company’s stock at any given time. This approach was based on a long-term perspective that ignored fads and current economic circumstances and did not focus on short-term results.”

Two notable investment thinkers, Benjamin Graham and Warren Buffet, influenced Henry’s philosophy for the firm. Benjamin Graham urged investors to resist the emotionalism of the market and base investment decisions on sound analysis of the business. He advised investors to think of themselves as owners of businesses, not speculators or traders of paper stock. Graham warned investors to be wary of stocks that had become too expensive even if those companies had strong fundamentals.

Warren Buffet follows Graham’s philosophy and finds suitable investment opportunities in companies that have enduring competitive advantages that will stand the test of time. Buffet favors companies with specific attributes, including reasonable debt levels, market domination, and shareholder-oriented management. Once Buffet commits to purchasing a stock, he holds those investments for long periods of time. Buffet professes that the prudent investor will be looking for opportunities to buy when the market is losing value due to emotionally driven trading.

The first test of Henry’s philosophy occurred on “Black Monday” (October 17, 1987) when the Dow Industrial Average lost 22 percent of its value ($500 billion). “Naturally, there was concern. Many investors were swept up by the emotion of the moment and began to sell. But I advised our clients, particularly those with a long time horizon, to stay with their investments as long as the earnings potential of our portfolio companies remained strong. We stuck to our principles and our clients weathered the bad times. The results have been quite satisfactory.”

Henry’s philosophy, informed by his experiences and fabled investment thinkers, has guided our firm through the decades and will continue to do so into the future.

* Past performance is no guarantee of future returns.