When our target is met, we sell.
A tremendous body of literature has, in our view, incorrectly argued for years that investors ought to simply buy and hold stocks. This argument has been forcefully put forth even in the face of extended periods of no to low returns from such an approach. We, on the other hand, do not subscribe to buy-and-hold dogma when securities prices tell us otherwise. We set a target price for each security that we own that is updated based on our analysis of all relevant information. When that price target is met, even if much sooner than we expected, we sell. When new analysis calls for a reduction in that target price to the point where the potential upside from the current price is no longer attractive, we also sell.
That said, we willingly hold positions for several years when we are convinced that the intrinsic value of a company is steadily rising and that a quantifiable discount persists. We also try to be tax-efficient, looking to reach the 12-month holding period required in order to establish a less costly gain. We will experience periods, however, of realizing short-term gains.
Roumell Asset Management strives to align itself with quality people in all of its activities. In selecting investments, we ask ourselves: Do we want to partner with this management team? Are they honest? Are they smart operators? We believe it is well worth our time to talk to managers, to visit with them over time, and to interview their colleagues, competitors, and other industry experts to the fullest extent possible. Company visits are often an important and critical part of our process when we are evaluating small companies.
In building our own firm, we are uncompromising in demanding that our employees are first rate individuals possessing exceptional personal qualities in addition to being talented professionals. We believe that "character is destiny" and that companies, including our own, are ultimately the expression of the judgments and character of the individual actors. We are a team dedicated to pursuing our investment passion alongside individuals who are aligned with our values.
No combination of overall strategy and implementation tactics can be separated from individual temperament. We believe our analytical and research strengths are anchored by mental toughness, imagination, and conservative judgment.
As we look to build and preserve wealth, we seek clients who share this temperament and value the steady-if unpredictable-creation of wealth resulting from a disciplined approach practiced over time.
Finally, we see professional investors facing increased obstacles as their assets under management grow to billions of dollars. We intend to keep our assets at a size that enables us to remain nimble and participate in less liquid segments of the market that can have a substantial impact on portfolio performance.
“No combination of overall strategy and implementation tactics can be separated from individual temperament. We believe our analytical and research strengths are anchored by mental toughness, imagination, and conservative judgment.”