Philosophy

West Group has a specific investment philosophy or series of investment principles we keep at the forefront of all investment decisions.

Buy and Hold

Our preferred holding period is forever. Embedded in this concept is one key rule. Only invest in properties that are good enough to outperform for decades.

Maintain a Healthy Margin of Safety

In engineering, the industry uses a margin of safety to ensure a building or bridge does not collapse. In this situation having a built-in redundancy/back up system for safety reasons makes perfect sense. But in the real estate investment world, many do not incorporate the same principle.

West Group believes the three most important words in investing are “margin of safety”. Margin of safety is the difference between the intrinsic value of a property and its purchase price. The Company maintains a healthy margin of safety on all investments.

Seek a Compound Return

The fundamental power of compound interest is one of the most important investment principles to understand. It should be implemented whenever possible and never interrupted unnecessarily. West Group believes investing over the long term takes tremendous patience and discipline but yields superior results largely due the power of investment compounding.

Wait for The Right Opportunity

West Group believes strong returns only follow from going after great opportunities. To West Group, success means being very patient when looking for a buying opportunity but aggressive when it is time to buy. West Group believes if it waits patiently for the right opportunity and has the courage and vigor to grasp it firmly when it arrives, it will be able to participate on the investment with the full weight of its capital in a meaningful way.

Stay Within the Circle of Competence

One of the things we try very hard to do is to stay within our circle of competence. This generally means only investing in situations we understand. West Group believes the important thing is not how large the circle but how well its perimeter is defined. When in doubt, we exclude.

Seek Properties with Wide Economic Moats

A key characteristic supporting consistent building operating history is a sustainable competitive advantage. In other words, a property should have a barrier to entry – or a kind of moat – that keeps potential competitors at bay. West Group seeks to establish soundly run properties in good locations because they have wider economic moats than poorly managed properties in undesirable locations.

Be a Contrarian

West Group believes in being fearful when others are greedy and being greedy when others are fearful. We are skeptical of conventional wisdom. When the investing public is extremely negative, it is usually a good time to buy. When investors are confidant, we are careful.

Embrace Focus Investing

West Group’s investment style is focus investing. We like to buy concentrated positions. When we find a property we like, we buy it. We think it is hard to find good investments so we concentrate on a few.

Our risk protection comes from understanding the market better than the market does and being patient enough to buy it at the right price. We think excessive diversification does not make sense and do not believe that it yields good results. We think all good investments involve relatively low diversification.

Stick To the Basics

West Group believes it is often possible for a tortoise, content to assimilate proven insights of his best predecessors, to outrun hares that seek originality. Many hares do not want to be left out of the crowd that ignores the best work of the past. We try to profit from learning from others and always remembering the obvious rather than trying to grasp the complex and esoteric.

Know What To Avoid

We believe investment success comes first from knowing what to avoid. We initially focus on what not to do – before we consider the affirmative steps we will take in a given situation. We gain enormous advantage by summarily eliminating all unpromising portions of the chess board and quickly eliminating the universe of what not to do.

By batting away many things, we avoid clutter and stay nimble. We then follow up with an informed and decisive attack on what remains only when the right circumstances appear.

Watch & Appreciate Taxes

West Group structures its transactions to best avoid the eroding effect of income tax. West Group harvests losses to offsets gains within the portfolio when possible and ensures it is maximizing its tax efficiency. We have found deferred taxes are a low-cost source of leverage that allows us to safely own far more assets than our equity capital alone would permit as deferred tax liabilities bear no interest.