Risk Management

At OSP, we believe that checking the downside is more important than forecasting potential gains. If management makes strategic miscalculations or executes poorly, we need to know how far the stock can drop, as even when that perfect storm hits, stock prices will generally have a bottom. We operate according to the following principles:

• Cash is king - we focus upon free cash flow.
• There must be enough liquidity to exit our position within a three-day maximum period.
• While we find undervalued stocks in eclectic industries, we only invest in sectors which we understand, and won’t be drawn into concept stocks.
• We do not force positions, and will stay in cash when market opportunities are not ripe.
• With the short squeeze an ever looming problem, we are very selective in our shorting, and have moved increasingly to a net long bias.
• The maximum position that we take in a stock is 10% of our portfolio.

Overall, our typical strategy is to go for the singles and doubles, racking up consistent, superior returns, rather than swinging for the fences.