Business Quality
Can the economics be understood, defended, and repeated?
Investment Principles
Think Like an Owner.
Harbor's work is grounded in two ideas: a share represents an interest in a business, and a conclusion should follow the evidence wherever it leads.
The Ownership Perspective
Ideas That Keep the Analysis Anchored in the Business.
“Your goal as an investor should simply be to purchase, at a rational price, a part interest in an easily-understandable business.”
Warren Buffett 1996 letter ↗
“We aim to be long-term, buy-and-hold investors. We seek to own only stocks that will compound in value over the years.”
Terry Smith Fundsmith source ↗
“Capital allocation is the link between business value and shareholder value.”
Pat Dorsey Presentation ↗
Applied, Not Decorative
Principles Become Questions.
Reinvestment
Can the company deploy additional capital at attractive incremental returns?
Capital Allocation
Does management treat every retained dollar as owner capital?
Valuation
Does the price allow for uncertainty and offer a rational balance of risk and value?
Contrary Evidence
What evidence challenges the thesis, and what would prove the central assumptions wrong?
“Investment is most intelligent when it is most businesslike.”Benjamin Graham
A Principle Is Useful Only When It Improves the Decision.
Harbor's research tests these ideas against primary evidence, financial statements, valuation, downside risk, and facts that may contradict the investment case.
Review the Research Method