Timucuan’s investment team originates its own ideas. Idea sourcing occurs in several ways and is supported by the firm’s collective knowledge base and experience studying companies and industries for two decades. Over the course of a typical year, more than a hundred preliminary stage ideas are culled-down to a subset of 10 to 20 companies that warrant full-scale due diligence. As in-depth work is conducted, Timucuan’s research professionals meet with management teams in person, and interview customers, suppliers and competitors. Our initial thoughts on valuation are shaped by our findings during the diligence process which culminates in an appraisal of intrinsic business value.
Purchase and sell decisions are made by the same team conducting research. We prefer to own businesses for extended periods. Our portfolio’s turnover has averaged less than 22% annually, indicating a holding period of approximately five years. New purchases are made when a business can be bought consistent with our selection criteria. Portfolio holdings are sold when the market price appreciates to 90%-100% of Timucuan’s appraised value. A company will also be sold if it can be replaced with a more attractive investment opportunity, upon a clear deterioration of the business’s fundamentals, or if the company’s management makes a capital allocation decision that is contrary to the objective of maximizing long-term shareholder value. Within our portfolios, cash levels are a byproduct of the investment process and are generally higher when qualifying opportunities are scarce. Firm clients specify an allocation to equities either by singular directive or in consultation with Timucuan by investment policy statement.