Q1 2025 - Seeking Winners Quarterly Letter
April 6, 2025
Dear Fellow Investors
Our investment journey began over 14 years ago, sparked by the writings of Warren Buffett, Benjamin Graham, Peter Lynch, Chuck Akre, John Bogle and in more recent years Chris Mayer and Thomas Phelps. From their insights, our investment approach evolved over time to what many would call “value” to “quality” investing. Following about a decade of solid performance with the aided tailwind of low interest rates, we decided to begin documenting our thoughts and process through this newsletter that we treat as a digital record of our investment journey.
We established our portfolio management philosophy on the principle of meticulously documenting our investment activities, creating a transparent record for you and ensuring accountability for our performance over time.
In the interest of clarity, particularly for those new to our reporting, we will continue to reaffirm our four fundamental investment principles on a quarterly basis, which serve as the criteria for portfolio inclusion:
Unwavering Focus on Cash Flow: We prioritize companies with a business model we understand and a proven ability to consistently generate high levels of free cash flow. This robust cash generation serves as the lifeblood of future growth and investment opportunities.
Identifying Capital Allocation Masters: Beyond simply generating cash, we seek companies with management teams who excel at allocating that capital effectively. This expertise in making strategic investments fuels long-term shareholder value creation.
Investing Alongside Outstanding Owners: We believe in the power of ownership mentality. We gravitate towards companies led by individuals who are themselves invested in the company's long-term success.
A Price Conscious Mentality: The starting price you pay does matter. We use a reasonable estimate of future cash flows to arrive at what we consider an acceptable price to pay for an exceptional business.
This letter will serve two key purposes: to review our portfolio companies' performance over the past quarter and, more importantly, to illuminate how our long-term investment philosophy guides our selections. We aim for our readers to fully grasp our investment process, recognizing that long-term returns are its direct result. While short-term market fluctuations can be unpredictable as we’ve seen recently, long-term market valuation aligns with company value. A sound investment process yields consistent returns over time, and this letter provides the necessary insights for understanding that process.
We've made a deliberate decision to exclude any commentary on macroeconomic or political developments. We recognize that the prevailing trend in investment communications this quarter will likely be a heavy emphasis on these very subjects. You'll find analyses of geopolitical tensions, interest rate fluctuations, tariffs & regulatory shifts in almost every other report. However, we firmly believe that devoting significant mental energy to dissecting these often unpredictable variables yields diminishing returns.
Our stance is that your time is more effectively allocated to a thorough understanding of your existing portfolio holdings and, importantly, to the enjoyment of your personal life. The constant barrage of macro and political information can create a sense of anxiety and distraction, diverting attention from the fundamental drivers of long-term investment success.
Unless you possess a unique and highly accurate predictive capability regarding imminent global catastrophe—a scenario we deem improbable—we maintain that the most secure and prudent deployment of your capital remains in a concentrated collection of fundamentally sound businesses. These companies are far more likely to weather economic and political storms than any attempt to time markets based on fleeting macro trends or political pronouncements.
Lastly, a key development in 2025 was our shift to a paid subscription model, offering monthly and annual options. This change has been met with strong positive reception, surpassing our first-quarter subscriber targets and leading to another 20%+ growth quarter in overall subscribers.
We are deeply grateful to everyone who reads and shares our work. Your support has been instrumental in our growth. This project, a tool for tracking performance and sharing insights, is made all the more meaningful by your engagement, which continues to inspire us.
