Investment Philosophy

OSP takes a value-oriented approach to investing, building most prominently upon the principles of Peter Lynch and Warren Buffet. We shun the herd mentality, and rely upon our own thorough research, supplemented by a coterie of analysts whom we have been working with for many years.

 • We spend our days researching companies, participating in conference calls and speaking to management, supplemented by face to face meetings with management at conferences or during on-site visits.
• With a number of former CEO’s as OSP investors, we often call upon these informal consultants for expert advice on companies from within their industry area.

Read more about our Competitive Advantage.

Our portfolio companies generally fit into one of two categories:

1. Overlooked companies with a small analyst following; and
2. Turnaround situations

Overlooked Companies

Our insistence on sound business practices makes spotting winners easier. A good story is not enough for us. We demand that companies:

• Have strong balance sheets;
• Maintain cash reserves with little or no debt;
• Retain solid, proven management;
• Have strong cash generation;
• Generate market share gains or be in industries that are growing; and
• Trade near their 52-week lows

Beyond the above, we demand a catalyst, whether internal or external. This can include anything from a new product or acquisition to cutting costs or a reorganization.

Turnaround Situations

Our typical process begins by identifying a proven company trading near its 52-week low, which we then continue to monitor as it begins to rise. Due to one-time glitches that hurt income, many strong companies experience dramatic drops in their stock price, yet once they resolve the issue, they return to profitability. For example:

• A new product failed, but production was then halted and the product worked its way through inventory.
• The company had poor management but replaced it with proven professionals.
• Money was wasted on flamboyant advertising but the budget was then slashed and re-centered on focused advertising.

If we’re confident both that management is on the right track and that the market will begin to take greater notice of the turnaround, we do further research, including:

• speaking with management to get first-hand understanding of the company’s progress
• focusing on insider buying, a crucial indicator that a stock is poised for future gains.