Our culture as a company — our professional way of life — is guided by a clear set of promises to one another and to our clients:

  1. We will not sacrifice performance on the altar of asset growth. There is a well-documented inverse correlation between asset growth and performance. To stay true to our investment mandates and to meet our performance goals, we will continue to limit assets under management.
  1. We live and die by our stock picks. We will not hug the index. With 25- to 35-stock portfolios, our clients get what they pay for — true active management.
  1. We will strive constantly to improve our investment and business practices. We are always looking for ways to be faster, better and smarter about how we invest. As investors engaged in the imperfect art of predicting the future, we want to define, through every possible means, what we have done well and what we could have done better.
  1. We will adhere to strict rules of stock selection and portfolio construction that limit downside risk. We need the backbone of discipline to deploy an investment approach that can be applied consistently in different market environments, yet is flexible enough to respond to a changing world. We can enjoy the benefits of concentration while navigating the risks that come with a best-ideas approach to investing.
  1. We will monitor every holding against a written thesis with milestones and risk factors. A paper trail documenting our investment case keeps us honest. While we do not expect our investment thesis and fundamental milestones to unfold perfectly as predicted (life has a nasty habit of getting in the way), written documentation allows us to learn from failure and replicate success. Documentation also helps us to separate process from outcome — an important distinction.
  1. We will act with the courage of our convictions, yet will change our minds quickly when the facts dictate. To be successful, we must think differently, especially when investor perceptions are based more on emotion than fact. But we must also be quick to concede that we’re wrong when the facts contradict our opinion. We invest in stocks — not opinions.
  1. We will maintain the same intensity and hunger for excess return over time. We want our tombstones to read “It was skill, not luck”.
  1. We will share profits and equity with our colleagues to foster stable results over the long term. Those who share the challenges of running our investment firm should also share in the rewards.
  1. We will be available to explain investment performance in depth. Many firms believe that the investment team should not squander their time meeting with clients. For Daruma, meeting with those who have entrusted us with a piece of their financial future redoubles our determination to put up good numbers. We consider time with clients well spent.