Investment Lifecycle and Strategies

INVESTMENT PHILOSOPHY WE VIEW STOCKS AS OWNERSHIP IN A BUSINESS • • The core of our investment principle is to approach buying stocks as though we were buying the entire business outright and retaining management. We consider ourselves first and foremost as business analysts, not stock analysts. The true value of a company is the net cash flows expected over its business life, discounted by an appropriate interest rate. Only when a company can be purchased at a significant discount to this calculated value, should an investment be made. LET VOLATILITY WORK TO OUR ADVANTAGE • On average, individual stocks fluctuate more than 60% in a 52-week period. • We don't believe volatility equates to risk. • Volatile markets occasionally offer extraordinary opportunities, and having cash allows us to take advantage of these. STAY WITHIN OUR CIRCLE OF COMPETENCE • • • We don't claim to be knowledgeable about every industry or investable opportunity. There are simply too many stocks and industries to do so meaningfully. Rather, we aim to invest in a few businesses we can understand, while the majority go into the "too hard" pile. We think it's best to recognize the boundaries of our knowledge, while always seeking to expand it. HAYDEN CAPITAL | 6.

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