Xponent Tribe

The key driver of returns in the compounding equation is the exponent "^n". Time does the heavy lifting of returns, and therefore focusing on longevity is the secret to wealth creation. The firm aims to deliver sustained value through a culture of long-term thinking and a rigorous process that builds a portfolio of resilient companies.

Core principles: 1. Sustainably maximize spread over cost of capital. Resilient business reflecting in high (ROCE - WACC). Sustained high spreads over the long term come from hard-to-replicate factors such as brand perception, network effects, high switching costs, economies of scale, and intellectual property / R&D. 2. Maximise time horizon for reinvestment. Maximise the period for which economic profits can be reinvested for growth. Reinvestment at high spreads for long periods comes from structural demand drivers, consistent new product development leading to a growing TAM, and a low industry rate of change. 3. Right captain for the ship. Management teams take decisions that optimize spread and time horizon. The firm looks for managements that have shown the ability to adapt and make dispassionate decisions, along with good corporate governance and capital allocation.