Our Approach: Public Equities

Our Approach

Pacifica’s goal is to build long-term wealth for clients by investing in public companies that have strong prospects for the foreseeable future. Our proprietary investment process focuses on acquiring stock in those businesses as part of a concentrated investment portfolio, at prices below our estimate of their intrinsic value. Our approach incorporates patience and discipline – and they are the foundation of PCI’s long-term success.

No part of our investment management is outsourced: we analyze and select each company, and then opportunistically include each one in a portfolio that has attractive long-term potential. We seek to minimize risk by knowing more about the companies we own. Pacifica gains no comfort in significantly “diversifying” holdings. Instead, we concentrate capital in our best ideas rather than spreading it around among lesser ones. The investable assets of the firm’s principals are concentrated in the same basic portfolio of companies as our clients (depending upon the opportunities available at the time).

Buy & Hold Investment Philosophy

Pacifica’s first rule of investing is “no permanent loss of capital,” and our investment approach is designed to avoid that occurrence over the long-term. The key to our success is finding outstanding businesses that can be bought at attractive prices and holding them over the long-term – and the longer the better. Our “buy and hold” philosophy also creates tax efficiencies for most investors.

Pacifica often holds substantial cash positions for varying periods of time while we await opportunities to buy interest in great companies when the market makes them available at discounted prices. Until compelling investment opportunities present themselves, your money will remain in interest or dividend-bearing instruments.

Focused on Quality Companies

Pacifica focuses on finding quality businesses that we understand well.

We define these as having:

  • favorable long-term prospects
  • sustainable competitive advantages, and
  • capable and shareholder-oriented management teams.

Pacifica’s investments are most often in companies that have strong brands, leading market positions, honest and capable management, high returns on invested capital, and sustainable competitive advantages – or is on the path to achieve them. We concentrate on select industries that understand well and seek to minimize risk by owning fewer businesses we know more about.

Value Investing

We strive to invest in the strongest businesses when the market makes them available at prices below our estimate of their intrinsic value. Since that condition doesn’t often occur, the PCI approach also includes opportunistic acquisitions of quality companies when there is a solvable concern within a company, trouble in its sector, or fear is prevalent in the broader market.

The key to PCI’s success has come from finding outstanding businesses that can be bought at attractive prices and holding them over long periods of time. We wait patiently until opportunities emerge and buy when we have confidence in the long-term performance of the enterprise. If those criteria are not met, our philosophy dictates that we hold cash until we find those opportunities.

Long-Term Results

Throughout its history, Pacifica has found and invested in strong businesses bought at attractive prices — and has typically held them for long periods of time. Our goal is to beat the market over time — not to beat it every time. Pacifica’s long-term track record, as illustrated on the Results page of our website, demonstrates how Pacifica has outperformed the market and has provided significant gains to its longest-term clients.

Investment Process

  1. Focus on businesses that are in our sphere of understanding – intellectually and financially (investing as opposed to speculating).
  2. Verify that the companies have favorable long-term prospects, including earnings that are expected to grow, growth opportunities, and durable competitive advantages.
  3. Verify that management is capable and honest - as evidenced by a history of acting with integrity and in the best interests of their shareholders.
  4. Acquire assets at prices below their intrinsic values. The intrinsic value can be calculated several different ways, but PCI focuses on discounted future earnings.

Investment Committee

Our three-member Investment Committee is tasked with idea generation – employing an entrepreneurial approach to find companies that possess the characteristics referenced above. We consult numerous research publications, as well as tap into our own experience and dialogue with management, industry experts, and consumers. The investment team is constantly looking for new ideas – many of these arising out of concepts in our daily lives and in industries we know well and are passionate about. Our investment process involves having the patience and discipline to wait for these companies to trade at prices below their intrinsic value. Once we identify an idea that possesses the qualities Pacifica looks for, we complete an in-depth research process involving additional due diligence and financial analysis to validate or reject our assessment of the business, its management, and governance. The Investment Committee meets regularly as Members present new investment ideas, respond to critical questioning, and defend earlier theses relating to existing holdings. Once a business makes it into our portfolio, we are constantly tracking business fundamentals and management capabilities to assure that the company is aligned with our long-term investment philosophy.