Contrarian Investing Philosophy – Lebed Asset Management
Human nature leads most investors to follow the herd. Securities and sectors favored by the herd tend to be overvalued, while out-of-favor securities and sectors tend to be undervalued.
We believe the best long-term investment results come from avoiding the herd and focusing on securities and sectors that are unloved and undervalued.
For individual stocks, we seek high quality companies (steady earnings and strong balance sheets) with strong market positions (competitive advantages and leading market share). We also try to find companies that generate a lot of free cash flow and use it wisely and buy them when they are out of favor (i.e. undervalued).
Similarly, we tend to employ fund managers with a contrarian bias. Although our broad philosophy may be contrarian, we look for a diversity of approaches. Not all managers are contrarians; some are talented investors whose investment style may itself be out of favor.