Three Arrows is a Capital Allocation and Portfolio Construction methodology. The strategy mimics Warren Buttett's mode of operations during the Buffet Partnership days.A key takeaway from studying Buffett's career is that he never got himself into a situation where he was a forced seller. His main concern, throughout the years, has been on how to deploy capital.Buffett doesn't predict market movements, hence he has constructed portfolios that can perform under market circumstances. He has generally invested in three buckets, each with its own characteristic.
The Buffett Partnership
Generally Undervalued Securities (Generals)
Generals: These are stock investments we see as fundamentally cheap. These are stocks we intend to hold for a longer period of time and our investment decisions are based on the underlying business and how we think it will perform over time.
Peter Lynch would sort stocks into different categories based on growth. He would classify them as slow growers, stalwarts, fast growers,
or cyclicals.
Work Outs and Special Situations
Special Situations / Work-outs: These are securities whose financial results depend on corporate action rather than supply and demand factors created by buyers and sellers of securities. In other words, they are securities with a timetable where we can predict, within reasonable error limits, when we will get how much and what might upset the applecart. Corporate events such as mergers, liquidations, reorganizations, spin-offs, etc., lead to work-outs.
Control Situations
These are investments where we either control a business are able to influence the policies of the company or where the future cash flows are highly predictable. This section includes investments in real estate that we control, cash and fixed income securities.
Get in touch
We assist foreign entities with business development and corporate finance in Iceland. And if we are not able to help, we will do our best to get you in touch with the appropriate local expert.