Idea Generation

A Long-Term And Often Contrarian Viewpoint

The Alchemist Fund’s investments typically fall into one of three categories: great businesses purchased at attractive prices; good businesses purchased at bargain prices; and special situations.

We generate ideas from extensive reading, screening, and personal communication with our clients and other professionals. These ideas are carefully appraised within the framework of knowledge we have built over nearly three decades in the profession.

Bottom-up Research

We Stick To The Principles

At the Alchemist Fund, we approach each potential investment in the same manner we would approach purchasing a company in its entirety. We focus on the quality of the business, our ability to evaluate its long-term economic prospects, the caliber of management, and the price offered.

We perform comprehensive financial analysis and due diligence of each potential investment, seeking out all relevant information to best appraise the value and risks of each business we consider.

Portfolio Construction

Highly Focused

We maintain a focused portfolio of securities, typically ten or fewer core positions, that provide economic diversification, trade at a significant discount to our assessment of intrinsic worth, and that we believe have a high probability of generating well-above-average returns with a modest risk of permanent loss.

Our level of investment is determined by the certainty we feel about the company’s prospects, the certainty which we can trust management to act in the long-term interests of shareholders, and the margin of safety we obtain in the purchase price.

Things To Consider

Volatility

Focus strategies are bumpy. A broadly diversified fund acts to smooth out the impact of price swings of individual securities. A smooth ride is also a relatively flat ride and typically yields below-average results.

The Alchemist Fund seeks above-average results and our investors should be comfortable with a bumpy ride.

Potential For Periods Of Underperformance

Highly successful focus investors including Warren Buffett, Charlie Munger, John Maynard Keynes, and Bill Ruane all endured periods of underperformance.

To invest in a focus strategy, it’s best if you are comfortable with results that may not mimic the market and can maintain a long-term orientation.

We May Hold Cash

We may hold cash when valuations are high or in the absence of opportunities possessing a high probability of generating above-average returns with a modest risk of permanent loss.

We Seek Clients With Long Time Horizons

We advise you to invest in The Alchemist Fund with funds that can be committed for at least five years. However, should you require access to your capital for any reason, you may withdraw any or all of your capital with us at any time with no penalties.

Clients enjoy complete transparency and unrestricted online access to their portfolios at all times.

*We request that clients keep the investment selection of The Alchemist Fund confidential.