Our approach is based on the following:

• We look for unrecognized extraordinary situations in the market to generate alpha on the long side. On the short side, we seek companies with unsustainable business models where we have a line of sight to impairment.

• We believe a few key issues determine whether we are right or wrong on each idea. Our research process centers on these issues rather than unrelated, extraneous information. We strive to focus resources on what matters.

• While we invest with a 3-year horizon, we believe returns are usually achieved when short-term fundamentals are on our side. We seek improving situations on the long side and deteriorating situations on shorts.

• We believe alignment with quality provides a long-term tailwind to the portfolio.

• Returns can be improved by actively managing investment behaviors. We utilize Bayesian updating to build and size positions methodically in an effort to avoid bias.