SAM’s singular focus is on creating a portfolio of long-term investments with an extraordinary risk/reward profile. Portfolios are built from the bottom up through deep, in-house, fundamental research. SAM’s value-oriented approach and emphasis on exceptional risk/reward opportunities results in a distinct and concentrated portfolio. SAM’s philosophy and process have remained consistent over the firm’s three decade history.
SAM’s portfolio generally consists of 25 to 35 Steinberg Stocks. A "Steinberg Stock" is defined by an asymmetric risk/reward profile, where SAM believes the risk of permanent loss of capital is small while the opportunity to grow capital on an annualized basis by 18-24% over a three to five-year investment horizon is significant. In addition, for each investment a "free call" is identified presenting an incremental opportunity for an outsized return in excess of the 18-24% annualized return target.
Key components of SAM's philosophy are:
- Identify Steinberg Stocks through Deep, Bottom-up, Fundamental Research
- Capital Preservation
- Invest with a Three to Five-Year Strategic Time Horizon
- Identify Free Calls
- Invest in the Understandable
- Build a Concentrated Portfolio
- Capitalize on Short-Term Volatility
- Target High-Quality Management Teams
When used by SAM in describing its investment philosophy “free call” refers to a future event or transaction that may or may not occur, the value of which is not reflected in a company’s share price. For example, it could be the potential appreciation of intellectual property or increased demand for a product. This event or transaction when realized serves as a long-term catalyst for the share price and will, in SAM’s estimation, add value to the company that will be reflected in a higher share price as the market recognizes this. SAM is not implying that an investor receives securities or options in securities for no cost by use of the term “free call”.