Investment philosophy
Our investment approach is built on a clear understanding of how the global financial system functions, how markets behave over time, and how capital can be compounded responsibly. These principles guide every investment decision we make.
Foundational principles
How we understand markets and capital
This frames our worldview and explain where we believe long-term investment advantages are found.
1. Focus on scarce and productive assets
We operate in a debt-based monetary system where money supply expands over time. In such an environment, assets that can be freely created tend to lose purchasing power, while scarce and productive assets benefit from long-term appreciation. We therefore prioritize ownership of high-quality businesses with durable competitive advantages, while minimizing long-term exposure to cash and fixed-income instruments.
2. Long-term orientation
Short-term performance pressures dominate many investment decisions. We view time horizon as a structural advantage and invest with patience, allowing business fundamentals and compounding—not short-term swings—to drive outcomes.
3. Active management over passive allocation
The growth of passive investing has transformed market structure. While passive strategies offer simplicity and low cost, their mechanical nature weakens price discovery and creates inefficiencies. We believe this environment increasingly favors disciplined active investors capable of fundamental analysis and independent judgment.
“The more people who believe in passive investing, the more mispricings there will be, and thus the more opportunities for active investors.”
— Howard Marks
4. Independent, research-driven thinking
Markets reward originality, not consensus. We form independent views through rigorous, first-principles research rather than market narratives or benchmark construction. Long-term outperformance requires the willingness to differ from consensus when supported by deep analysis and conviction.
Portfolio construction principles
How we allocate capital
Portfolio construction reflects the disciplined implementation of our investment ideas, defining how capital is allocated, sized, and structured to balance opportunity and downside risk.
5. Asymmetric risk-reward
We seek investments where downside risk is limited and upside potential is substantial. Capital is allocated selectively to opportunities where the balance of probabilities and outcomes is clearly in our clients’ favor.
6. High conviction over excessive diversification
Broad diversification may reduce volatility, but it also guarantees average outcomes. When our research identifies compelling risk-adjusted opportunities, we allocate capital meaningfully rather than diluting returns across an overly broad portfolio. Concentration reflects confidence grounded in analysis and discipline.
7. Capital preservation first
Long-term compounding requires avoiding large, permanent losses. We embed capital preservation directly into portfolio construction through disciplined position sizing and concentration limits, ensuring that no single investment can materially impair the portfolio. Risk is managed structurally, before capital is deployed, while preserving flexibility to allocate meaningfully where conviction is highest.
Risk management principles
How we define and manage risk
The below principles govern how risk is understood and how discipline is applied across all investment decisions, independent of market conditions, complementing the structural risk controls embedded in portfolio construction.
8. Volatility does not equal risk
Price fluctuations are a natural part of investing and often create opportunity rather than danger. We define risk as the permanent impairment of capital—not temporary market movements—and focus on underlying business fundamentals.
“Volatility is far from synonymous with risk.”
— Warren Buffett
9. Operate within a defined circle of competence
Superior investment decisions come from depth of understanding, not breadth of exposure. We invest only in businesses and industries we understand deeply, favoring simple, transparent, and durable business models.
10. Alignment with clients
Trust is foundational. We invest alongside our clients and manage capital with a long-term partnership mindset, ensuring alignment of incentives and decision-making.
Performance versus Benchmark
Below the Ferramonte Absolute Return portfolio’s performance* since 2023**, set against the S&P500 and Nasdaq Composite. We continue to hold ourselves accountable against these benchmarks, and strive to continue outperforming them over the coming decades.
*Individual client performance may differ materially as each portfolio is tailored to the client’s unique needs and risk preferences. The portfolio performance charted below reflects the performance of a fully self-funded portfolio.
**Start date precedes the establishment of Ferramonte Capital Management.
| 2023 | 2024 | 2025YTD | |
|---|---|---|---|
| Ferramonte Abs Rtrn | 55.41% | 33.87% | 44.33% |
| S&P500 | 26.29% | 25.02% | 16.67% |
| Nasdaq Composite | 43.42% | 28.64% | 21.72% |