Why Wedgewood Partners Inc.?

Two interrelated reasons not shared by most investment managers.

1. We view the entire investment process through the prism of a business owner. We are not securities analysts gaming quarterly earnings expectations.

2. We have a healthy respect for index investing.

These views may seem to be anachronistic coming from an active money manager, but let us explain.

Our views on each are reflected in both our investment philosophy and our portfolio management. These views are the root of our out performance.

The investment management business is unlike most businesses in that the “average” product (in this case, investment returns) is unsatisfactory from the consumers point of view. Managers who even outperform their respective peer groups could well be an unsatisfactory experience as well for the client if returns are less than the market index.

The simple, but uniquely persuasive fact of the superiority of index investing over active investing is that in order to add value to the client, active investors must be considerably better than index investing. History has proven that few are.

Our respect for index investing and investing as business owners has led us to two aspects of our approach that are quite different than our competitors. To outperform an index, we believe that our portfolios must be constructed as different from an index as possible. Thinking and acting like business owners reduces our interest to those few businesses which are superior. Both of these views lead to our focused (concentrated) approach.

To outperform our peers, we believe that we must emulate the most powerful attributes of index investing. By definition, index investing is buy and hold investing. This leads us to our history of minimum turnover of our portfolios. As a corollary, this also affects our stock selection. If we expect to invest in companies for many years, we must then focus on those select companies with the brightest multi-year prospects for growth. In addition, our view on risk is contrary to the typical manager as well. We do not view risk via individual security price volatility (beta), rather all of our risk analysis is centered on the individual business.

Why do we have a plus 10 year history of outperforming index investing and most active managers? We are different. We are unique in that we think and act unlike the vast majority of active managers. Our results speak to our process.