TJS Partners, Inc. is a value-oriented research boutique seeking special situations in publicly traded securities. The focus is principally on equities, but there are few limitations if the right situation presents itself. Broadly, we seek securities that are available for purchase at a substantial discount (typically 35-50%) to their intrinsic value or worth, suggesting that a patient and disciplined investor buy and hold those securities for a defined period of time, and sell as the securities approach full value, thereby earning a satisfactory and likely material excess return. Intelligent investors will recognize this approach as both proven and time tested.
The element of a bargain is key to the process and creates a “margin of safety” or margin for error against the many things that can and do periodically go wrong. The margin of safety is always dependent on the price paid - it will be large at one price, small at a higher price and non-existent at some still higher price. The number of bargains can vary widely from year to year. Sometimes the prudent investor will review dozens of potential investments and come away with nothing. But that is the necessary discipline. In the words of Charlie Munger, Vice Chairman of Berkshire Hathaway, “We’re looking for 6 to 5 shots, that pay 3 to 1.” Literally, a mispriced bet. Obviously, all won’t work out exactly like that, but the average of a carefully selected group of securities over a multi-year holding period should be satisfactory.
Under-valued securities frequently and recurrently exist in the marketplace, but over the long-term securities prices tend to accurately reflect the underlying performance of the business or underlying value of their assets. We believe in the "Efficient Market" over the long term, just not over the short term and all the time.
Value investing is like a multi-year arbitrage, purchasing $1 of intrinsic value for $0.50 and expecting the value gap to close over a multi-year period of time, and thereby having a high probability of earning the difference over the holding period.