Marshfield Associates

Marshfield’s investment philosophy is distinguished by placing our focus where others do not, namely industry structure and corporate culture.

Industry structure refers to such attributes as competitive rivalry and the power of customers and suppliers. We want our companies to have leverage within their industry’s value chain. We also look for companies with a deep understanding of their competitive advantages and the discipline to remain focused on maintaining and exploiting those advantages.

Corporate Culture is the internal compass as expressed by the company’s attitude toward customers and shareholders; it must be both appropriate to the business and permeate the organization. It cannot simply be lip service mouthed by management. We particularly looks for managements with integrity, courage and resolve.

We do not own very many stocks – generally around 18. Conventional wisdom suggests that safety in the stock market requires owning a lot of stocks, as the impact of mistakes will be dampened. By necessity, however, the impact of good ideas would be similarly reduced. Our long history of investing has demonstrated the value of shying away from conventional wisdom. Owning a few stocks allows us to be very selective, and to know portfolio companies very well. We buy companies that themselves are safe, that are well-managed and in good industries so that they are resilient in bad times and profitable in good times.
We invest slowly, adhering to a strict price discipline. It typically takes us 1 ½ to 2 years to invest a client’s equity portfolio. The simplest way to make money is to pay much less for a stock than it is worth. Stock prices are volatile, and individual stock prices are much more volatile than the overall market. We are willing to wait, which means we can buy stocks at cheaper prices, and often much cheaper prices, than if we went out and bought them all today.