HX Legacy – Quarterly Review

Welcome to the second Quarterly Review of the recommendations for our INVESTING publication, HX Legacy.

For this publication, we publish a thorough review of all outstanding positions, and anything closed during the previous three months every three months (after reporting seasons).

This publication aims to identify stocks (and occasionally other securities) where we can produce at least a +100% return over an intermediate (three-year) period.

That is the "floor" of what we are looking for, but we are – of course – aiming much higher. Our goal is to have several positions that can be multi-baggers over time.

However, one critical aspect of this strategy is that we are focused on capital preservation.

While we would love to see several multi-baggers in the portfolio over time, we will work hard to avoid any material (-35%) destruction of capital.

We look at the base goal as a "three-to-one" risk/reward. We only put in ideas we think can double, but we will work hard to avoid losing more than a third of the original investment in any position.

Across our thirty years of long-term investing, we think this is the "sweet spot" of risk/reward.

The portfolio also takes an eclectic approach regarding the "style" of investment we recommend.

Many of our ideas would fall into "growth" investments. The stock will likely follow if a company can grow revenue and earnings by two, three, five, or ten times.

We also are focused on another group of ideas around asset value.

This is not necessarily a traditional value approach of "paying $0.10 for $1" of assets. Instead, it is identifying assets where we are paying $1, but we are confident that the asset value will be $2, $5, or even $10 in the future.

Most of these ideas are genuinely unique franchises that cannot be replicated. This has been a particular area of focus in our career.

You can revisit the HX Legacy Primer here for a lengthier discussion of our strategy.

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