Our approach is based upon the following two beliefs:
Markets underestimate the importance of the value proposition.
Our understanding of the value proposition and avoiding simple extrapolation of current growth trends, allows us to better model the growth rate of the product/service. This is what allows us to invest in companies where Wall Street is underestimating growth and avoid investing in those where they are overestimating growth.
Markets overestimate certain risks.
Markets have a tendency to misprice risk in smaller companies based on the fact that these companies tend to rely on single products for a material percentage of their revenues, are heavily concentrated with a few customers or face large competitors. The market often views these risks in isolation of the value proposition and thereby under or overvalues these companies.