Orion Investment Company has been investing for clients since 1988.
Our approach aims to promote low-risk, well-founded, consistent decision-making and overall investment excellence, in order to provide clients with the possibility of earning superior risk-adjusted returns.
We store capital in cash or quality fixed-income securities. The selection of the type and duration of these securities, including the holding of cash, is a critical element of our approach and contributes to the overall risk-adjusted return of a portfolio.
We construct a focused stock portfolio based on our own following of companies, industries and the economy through the business cycle. Desirable characteristics of companies include low debt, a history of strong management, consistency in earnings, and an inherent competitive advantage—whether from market dominance, technology, intellectual property, etc. We recognize the potential of smaller companies to accelerate portfolio returns. We can provide a thorough rationale for each asset that we own.
We invest patiently, building on gains. This reduces risk, since material losses early in a portfolio’s life are most injurious to long-term growth. It also provides the opportunity to make additional investments in companies over the business cycle when their prices become attractive or experience a temporary markdown.
Our expected investment horizon for a company is at least 10 years. This allows the quality of a company to emerge from the noise of inevitable short-term price movements and results in very low turnover.
Mutual funds are inherently opaque. You cannot know at any time what you own and why you own it. This opacity is compounded by the high turnover of many funds. And you generally cannot meet with the managers of a fund to understand how they invest.
Compared to a stock or a single fixed-income security, there is much less quality information about a mutual fund when you decide to buy, sell, or hold it. This tends to increase risk and reduce returns.
Hiring an advisor to invest in mutual funds for you creates an additional dynamic detrimental to good decision-making. The advisor may unconsciously attempt to deflect responsibility for poor investment performance onto the managers of the funds. “These guys are down—let’s move into a better fund.” This results in selling low and buying high. So investors can end up paying two layers of fees for a suboptimal process.
Investors in index funds miss the opportunity to use the information and insight gathered from in-depth following of specific companies to guide investment decisions. We believe you are more likely to earn higher returns at lower risk by investing in a much smaller group of quality companies that you know and understand than by “buying everything.”
Also, creators of indexes can and do change compositions of individual indexes, for marketing reasons, for example. This increases the opacity of such investments.