Elemental Capital Management
Investing in wonderful businesses built to compound shareholder value over time.
A concentrated, long-term approach to equity investing focused on high-quality enterprises with enduring competitive advantages.
Guiding Principles
Three fundamental beliefs.
Our portfolio consists of high-quality businesses with durable growth potential, regardless of market capitalization or sector. Our approach rests on three principles.
- i.
Businesses create wealth by generating returns on capital that exceed their cost of capital.This is the only reliable engine of long-term value creation.
- ii.
The paramount risk is permanent loss of capital.We seek to avoid it through rigorous selection rather than through diversification for its own sake.
- iii.
The best results come from concentrated ownership of exceptional enterprises purchased at reasonable valuations.We would rather own a few wonderful businesses than many mediocre ones.
Discovering Rare Enterprises
The difference between a good business and a great one.
Very few companies sustain high returns on capital over long periods. We look for those that earn well above average, typically in excess of 20%, and that can reinvest their earnings at similarly attractive rates for years to come.
Businesses like these possess unique, durable competitive advantages, and they are rare. That is why our portfolio is limited to a small number of companies.
Earnings on $100 invested at a 20% return
Hypothetical example from our Owner’s Manual, shown for illustration only. It does not represent the performance of any investment.
Owner’s Manual
Owner’s Manual
A partnership that begins with candor.
“We would rather manage less capital well than more capital indifferently.”
Inspired by the owner’s manuals of investors we admire, including Warren Buffett and Terry Smith, ours sets out how we think about investing, what we expect of ourselves, and what we hope for from our partners.
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Investor relations
ir@elementalcapital.com