At Mavos Capital, our circle of competence focuses on fundamentally analyzing companies in which we can have some kind of “edge”. Typically this edge comes in the areas of the market that are less explored by other investors. This refers back to an anecdote about fishermen in a write-up on our Substack. To better understand where we find this “edge”, we have defined a few categories and subcategories on this website and on our Substack.

For more details on strategy you can scroll using the arrows to the left and right. To find a detailed write-up of our strategy, please click on “Learn More” below.

As always, feel free to contact us with any additional questions.

A Dark Horse is defined as “a candidate or competitor about whom little is known but who unexpectedly wins or succeeds”. When we think about Mavos’s Dark Horse strategy and where we look for opportunities, we cannot think of a better definition.

Dark Horses can take many forms. Sometimes these companies are too small for large institutional investors to even think about or too complex for other investors to even think about exploring them. This points to our discussion previously on fishing where the fish are, not where the other fishermen are. Often times there is also little to no analyst coverage on these companies.

Investors looking to invest in Dark Horses will typically need to put in extra work. This sets Mavos up to have an “edge” purely by being willing to put in the work necessary to find these hidden gems.

These companies and opportunities are overlooked because they are unexpected to win or succeed. So, by definition, these companies are Dark Horses.

Some people call them compounders. These are companies that have done well for awhile but for one reason or another, the market thinks they will not “sustain” for long. Our thesis is that these companies will do well for longer than expected for various reasons. When they do “outperform” their expectations, they will re-rate and capital appreciation will ensue.

Here are some characteristics we look for in Sustainers:

• Companies that have a strong competitive advantage and value proposition that will compound their growth over time

• Companies that have a wide moat which leads to high margins

• Strong businesses that have secular tailwinds which leads to predictable free cash flow

Investment opportunities in the Catalyst pillar are affected by some kind of catalyst. After this catalyst occurs, the share price will reflect this, thus leading to capital appreciation. The investments in the Catalyst pillar can either be short-term or long-term.

Investments that are more short-term in nature can take on many forms but some examples are:

• A strategic alternative proposed by the board

• A spin-off from a larger parent company

• An acquisition bidding war

• A sale of a large division

• A large pay-down of debt

• A regulatory change

• A legal case with material upside

• …and many more

Catalysts are types of investments a lot of investors just simply do not look for because they are hard to find, they do not typically “screen” well and sometimes they are just flat out boring and complex to research. But we like these scenarios because remember, we like to fish where the very best fish are.

Longer term event driven investments are typically some kind of macro theme that is leading to secular change in the prospects of a company and industry.

These could be a change in consumer sentiment that takes an out of favor industry and puts it back in the limelight, a world event that creates a supply/demand imbalance (this one is important to analyze because these situations can either be very cyclical or under other circumstances lead to secular changes in the way industries operate), etc.

Typically in long term Catalyst investments, capital appreciation will occur when the rest of the market realizes the longer term value created by the catalyst.

Sometimes there is a distinct event or catalyst that causes an immediate realization of value but more often in these scenarios, this will be recognized over a longer time horizon.