Giverny Capital – Annual Letter to Partners 2016

It has been more than two decades since I discovered the writings of Warren Buffett, Benjamin Graham,  John Templeton, Philip Fisher and Peter Lynch. I then decided to begin managing a family portfolio based on an investment approach synthesized from these great money managers.  By the end of 1998, after five years of satisfactory results, I decided to launch an investment management firm offering asset management  services  aligned  with  my  own  investment  philosophy.    Giverny  Capital  Inc.  came  into existence.

giverny capital

In 2002, Giverny hired its first employee: Jean-Philippe Bouchard (JP for those who know him well).  A few years later, JP became a partner and participates actively in the investment selection process for the  Giverny  portfolio.    In  2005,  two  new  persons  joined  the  firm  who  eventually  became partners: Nicolas L’Écuyer and Karine Primeau.  Finally, in 2009, we launched a US office in Princeton, New Jersey.  The director  of  our Princeton  office,  Patrick  Léger,  shares  in  the  culture  and  long-term  time horizon inherent to Giverny.

We are Partners!

From  the very first  days  of  Giverny,  the  cornerstone  of our  portfolio management  philosophy  was  to manage client portfolios in the same way that I was managing my own money. Thus, the family portfolio I’ve managed since 1993 (the “Rochon Global Portfolio”) serves as a model for our client accounts. It is crucial to me that clients of Giverny and its portfolio managers are in the same boat! That is why we call our clients “partners”.

The Purpose of our Annual Letter

The primary objective of this annual letter is to discuss the results of our portfolio companies over the course  of  the  prior  year.    But  even  more importantly,  our  goal  is  to  explain  in  detail  the  long-term investment philosophy behind the selection process for the companies in our portfolio.  Our wish is for our partners to fully understand the nature of our investment process since long-term portfolio returns are the fruits of this philosophy.  Over the short term, the stock market is irrational and unpredictable (though  some  may  think  otherwise).  Over  the  long  term,  however,  the  market  adequately  reflects  the intrinsic value of companies.  If the stock selection process is sound and rational, investment returns will eventually follow.  Through this letter, we provide you with the information required to understand this process.  You will hopefully notice that we are transparent and comprehensive in our discussion.  The reason  for  this  is  very  simple:  we  treat  you  the  way  we  would  want  to  be  treated  if  our roles  were reversed.

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