Private Value Management, LP is an investment management company established in 2003 to manage the investments for an Annapolis based Family Office. In 2006 we started a private pooled investment fund, CVPLP, as a vehicle to manage equity investment capital for other accredited families and institutions. Our investment approach is one of identifying companies having sustainable competitive advantages allowing them to produce high levels of free cash flow and earn high returns on invested capital. We invest when the shares of the business are available at prices representing an attractive discount from the company’s true intrinsic value. The larger the difference between current price and value the greater the margin of safety and the more attractive the company is for investment. We believe we can do this best by investing in securities where experience, specialization and superior analysis can offer an investing edge. We are regularly willing to invest in businesses whose shares might generate short-term Fund underperformance in order to position the Fund in a way that provides the best opportunity for better long-term results.
We exercise considerable patience with our investees resulting in very low annual portfolio turnover in order to gain the benefit of compounding inherent in successful long term growing businesses. A wonderful business purchased at an attractive price has little risk in the long run despite the likely possibility of significant price fluctuations in the short run due to the natural vissicitudes of the stock market. We employ adequate diversification for risk control purposes but prefer to concentrate our assets across 25 to 30 investees and will often have 50% of our assets invested in our top 15 investments. We aim to invest larger amounts in businesses having lower price to value comparisons and will reduce exposure to those businesses when the value gap narrows.
Our investment focus is long term and we are interested in working with clients who are aligned with our value investing philosophy, who appreciate our independence of thought and who possess the emotional stability to recognize the wisdom of buying bargains during price declines. Having stable clients with a long-term orientation is crucial to the eventual success of both the client and the investment management firm. We think investing is hardest when it seems easiest and is much easier when others are rushing for the exits. Our willingness to invest amidst declining share prices is the best way we know to build positions in good businesses at attractive prices. We have learned that the best values with the greatest margin of safety are more abundantly available during declining market environments. We keep our fund fully invested whenever shares of attractive businesses can be bought.