The Lugarno Fund
We believe that the easiest way to grow capital is to avoid losing it. In practice this means investments require a large safety margin between what we pay and the value we believe we are receiving. We also prefer companies with substantial tangible assets to protect us should things not go to plan.
The Lugarno Fund manages capital on behalf of its staff and a cohort of investment partners who also think unconventionally, act counter cyclically, and have a long-term investment horizon. The fund is open to wholesale investors with a min of $250k to invest.
We believe in the concept of skin in the game – we eat our own cooking.
This fund serves as the primary investment entity for the Harradence family’s wealth, so you can be confident we are treating your investment like it’s our own.
This fund exists to generate solid returns and if we fail to do so we do not deserve to be in business. We do not charge a management fee and only earn performance fees if we achieve returns of greater than 6%. This fee structure is a clone of Warren Buffett’s early partnership.
Good investment opportunities are rare so when they come along, we are willing to invest significant amounts of the funds capital to maximise the investor’s benefit. Conversely, we are content holding substantial cash in the absence of valuable opportunities.
In order to consistently make good decisions, we cultivate a sceptical and contrarian mindset. It is statistically impossible to generate great returns by investing with the same lens and conventional wisdom of ‘Mr Market’.
Our investment strategy looks to capitalise on two main elements of the investment market place.
— Inefficient distribution of information: This is where under-researched companies are much less understood by the broader market.
— Over-reaction tendency: This is where investors act in a herd-like manner by over-reacting to negative news on otherwise quality investments.
Well known opinions are usually priced into stocks and so we find that ideas are only valuable if they are contrary to consensus.
Internally, we judge our performance over periods of at least 3 years and we ask you do the same. While we strive to identify near term catalysts for our investments, ‘Mr Market’ rarely agrees with our perspectives as fast we would like.
We believe wealth gives people the freedom to live their best life and we are immensely proud to get to work every day helping you with that.
Mr Market is kind of a drunken psycho. Some days he gets very enthused, some days he gets very depressed. And when he gets really enthused you sell to him, and if he gets depressed, you buy from him.
— Warren Buffett