Philosophy | Bridgefield Capital

Investment Philosophy

We believe that non-investment grade, middle market companies exist in an inefficient area of the market sector often overlooked by market participants. Such companies provide Bridgefield with a fertile source of investment opportunities.

Our investment philosophy consists of five enduring tenets that have remained unchanged

Risk control is job #1

Our aim is to achieve outstanding investment performance, while minimizing the associated risks. Simply achieving above-average returns during times of market growth is not an indication of skill; it is important to demonstrate superior performance during difficult times to prove that any profits gained were the result of expertise rather than simply taking on excessive risk. Consequently, our primary focus is not solely on maximizing potential profits but on preventing losses. We firmly believe that in the dynamic markets we operate in, prioritizing loss prevention is key to success, as avoiding losses enables winners to emerge naturally.

Emphasis on consistency

We do not find it satisfactory to alternate between achieving top-quartile results in prosperous years and bottom-quartile results during periods of economic downturn. We maintain that a superior performance record is best established by maintaining a consistent level of performance, rather than experiencing a combination of impressive triumphs and disappointing setbacks.

We search for inefficient markets

We believe that through expertise and diligent effort, it is possible to gain a "knowledge advantage" that could potentially lead to exceptional investment outcomes. However, we do not believe this is achievable in so-called efficient markets, where a vast number of participants have equal access to information and impartially use it to determine asset prices. We are of the view that less efficient markets exist, in which rational application of skill and hard work could yield favorable results for our clients. It is only in such markets that we choose to invest.

Projections about the economy are not critical to our investments

Our belief is that producing consistently impressive returns for our investors can only be accomplished through possessing a superior understanding of companies and their securities, rather than relying on predictions about the economy, interest rates, or financial markets. As a result, our investment approach is entirely focused on a bottom-up strategy, which relies on internal, in-depth research of individual companies.

Market 'timing' is not fundamental to our investments

As we do not have confidence in our ability to accurately forecast market trends, we ensure that our portfolios are completely invested whenever attractively priced assets become available at a discounted rate to their long-term value. While apprehension about the market environment may cause us to lean towards more conservative investments or exercise more caution, we do not resort to raising cash. Our clients engage us to invest in particular market areas, and we have an obligation to fulfill this responsibility. While holding on to investments that experience a decline in value may be uncomfortable, it is unacceptable to miss out on potential returns because we did not invest in what we were contracted to purchase.

Investment Philosophy

Our investment philosophy consists of five enduring tenets that have remained unchanged

Risk control is job #1

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