"When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact" (Warren Buffett)
At Valor, we look to minimise your tax burden and maximise your wealth with a long-term investment strategy focused on high-quality businesses.
Instead of constantly buying and selling, it is far better to invest in companies with strong fundamentals and sustainable growth potential. This buy-and-hold approach allows you to benefit from the power of compounding, growing your wealth tax-efficiently over time. By holding these quality assets, you defer or even eliminate capital gains taxes that would be incurred with frequent trading, letting your money work harder for you.
"Never interrupt compounding unnecessarily" (Charlie Munger)
A strategic, long-term investment approach can help you build wealth and minimise your tax liability. Unfortunately, this type of investing doesn't work if you invest in poor businesses. There are far more poor businesses than good businesses, which is why so few achieve acceptable results.
At Valor, we believe in the power of long-term compounding. Our investment strategy focuses on identifying and investing in exceptional companies, allowing their intrinsic value to grow over time. We also have a history of holding investments for extended periods. Our continued ownership since 2011 in investments like Alphabet (then Google), Berkshire Hathaway, and Bank of America exemplify this approach. We seek out "wonderful companies" where we can confidently let compounding work its magic over decades.
While opportunities like the Activision Blizzard acquisition, which generated a 36% return in a single year, can be attractive, they are infrequent and often subject to higher tax liabilities. Our focus is on the long game. We prioritise identifying and investing in "wonderful companies" capable of compounding shareholder wealth at double-digit rates over decades. These enduring businesses offer a more sustainable and tax-efficient path to long-term growth.
Companies like Constellation Software, one of our core holdings, has compounded shareholders wealth like few others. With 40,000 acquisition targets, we are very comfortable that the runway ahead for Constellation is long:
While valuation plays a role in investment decisions, a truly long-term perspective prioritises the quality of the business. Over extended periods, the compounding of earnings and intrinsic value within exceptional companies can become the dominant driver of returns, potentially overshadowing initial valuation considerations. A wonderful company, consistently growing and reinvesting its profits, can see its value appreciate significantly over decades, even if the initial purchase price wasn't a deep value bargain.
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