Investment Strategy

Investment Strategy

What is Value Investing?

Most advisors do not even mention value investing to their clients. Maybe they don’t mention investing much at all. Instead, they lead with planning and consider investing after the fact, pulling from a catalog of hundreds of investment solutions and focusing discussions on diversification. Developing a fundamental investment strategy requires much more. It requires inherent curiosity and intense research, married with deep experience and analytical skills, to make informed decisions. It takes confidence and a proven track record of performance to select options that fit that mold deliberately. A high level of patience and focus must always be present to remain on the road less traveled – the one with flatter peaks and valleys that will get you where you’re going with less heartache. That’s value investing at Alpine, and it’s an approach you’re unlikely to hear about from most other wealth managers.

Alpine’s investment philosophy and discipline are based on “Intrinsic Value”, as articulated in Benjamin Graham’s Intelligent Investor. Graham was a mentor to Warren Buffet, who many believe to be the world’s greatest value investor. This philosophy drives us to seek quality businesses whose stock price does not currently reflect the underlying valuation of the company based on the company’s expected cash flows and earnings. Guided by the orientation of a private investor buying a select group of quality businesses, we protect capital from permanent impairment by avoiding investments in overvalued companies.

We don’t want to own the market or chase performance, and we believe you shouldn’t either. We go where the value is and look for opportunities across any market capitalization, industry, and geographic region that presents an opportunity to buy at a discount from intrinsic value. The Alpine team is relentless in our search but patient in our decision-making. We’re clear on the criteria, committed to our process, and remain disciplined about what businesses we invest in – and at what price. It’s a long-term approach with a 10-year target holding period and a 30-year intrinsic valuation. This formula has a history of producing results.

Partner. Perform. Protect.

Alpine’s Investment Principles

consist of five core principles

Intrinsic value is the cash generated by an investment. Fundamental value is earned in the future as dividends, interest, and principal are paid or as retained earnings are successfully reinvested. Risk is the likelihood and potential magnitude of a decline in investment cash flows or the payment of a market price at purchase which, is higher than the fundamental value.

When buying, we never confuse fundamental value with market price. Market price is what we pay. Fundamental value is what we get. Market price may be found quoted daily in the financial press. Investment cash flows determine fundamental value.

Market price, it follows, is not a barometer we would use to evaluate corporate performance. Our corporate performance evaluation is based on income, assets, and return on capital. We view the stock price of a publicly traded company simply as a record of what others – well – informed or not – were willing to pay for it at various times in the past.

Fundamental value is a critical concept because it is the only reference point for what an investment is worth and, therefore, whether or not the market price is fair, high, or low. Two facts support this view. First, the theoretical point that an investment is worth the present value of its future cash flows is self-evident and undisputed. Second, new-era theories that have driven prices to speculative levels in the short run have always succumbed to the basic idea of fundamental value in the long run.

Investor portfolios must contain primarily quality investments. By definition, the portion that is not quality is subject to unpredictable and material loss. Therefore, we recommend that risky investments represent a small portion of the investor’s portfolio.

We define quality at the investment level. A reliable stream of cash flows justifies the price of a quality investment. Any other type of commitment is speculative.

A quantifiable margin of safety is the hallmark of a quality investment. For fixed-income investments, (a) an issuer’s available resources must be significantly greater than the interest and principal due the investor, or (b) the assets backing an issue must be significantly greater than its price. The former applies to high-grade bonds, the latter to low-grade bonds.

For equity investments, (a) the intrinsic value of a company must be significantly greater than its price, or (b) the probability of achieving a desired return must be very high. The latter provides a perspective on value, which may be applied to high-grade equities.

True understanding is built upon high-probability statements about businesses and values. It requires a dogged determination to get to the bottom of things and an equally resolute honesty about whether or not we did.

Understanding is also relative. Achieving better-than-average returns requires understanding security values better than average. The problem is most investment managers believe they are better than average.

Competence and honesty are the keys to ensuring we are not fooling ourselves. Competence means we can estimate business values and returns for our portfolios and the markets in which we participate. Honesty means we are candid about our relative return advantage or lack thereof.

Proper diversification is paramount to quality at the portfolio level. Proper diversification is achieved when the overall portfolio return is protected from unexpected adverse results in individual holdings, industries, or countries.

Proper concentration can be risk-reducing as well as value-enhancing. Concentration refers to making more significant commitments to more attractive investments. The greater the difference between intrinsic value and market price, the more robust our knowledge of an investment’s value, and the lower the risk of the investment, the more wealth we will concentrate in that investment.

Successfully executed, concentration has three benefits: (a) returns are enhanced by selecting investments with the highest probability of success, (b) risk is reduced by avoiding mediocre and poor commitments, and (c) knowledge is improved by concentrating the analytical effort.

A concentrated portfolio with fewer holdings is desirable when value-to-price, understanding, and quality are high. A low-cost, more widely diversified approach to a market is appropriate when there are no clear advantages in knowledge and, therefore, in our ability to evaluate quality or estimate value-to-price.

One of the greatest risks investors face is selling low in a panic. Education and communication can significantly reduce this risk. We explain to clients the difference between intrinsic and market value and openly share the rationale behind our investment decision-making. We believe this significantly reduces the risk of clients selling at market bottoms or buying at market tops.

Communication is also essential for evaluating an investment manager’s abilities. Luck, risk, and a bull market can make an incompetent manager look brilliant. Conversely, every brilliant manager will underperform at some time, which is usually the best time to invest with them. Investors must look beyond performance to evaluate manager competence. To aid current and prospective clients in this endeavor, we regularly discuss the strategy and holdings behind our performance, and candidly address both our successes and errors.

How is the Alpine approach different?

Wealth Structuring

The ALP Principles recognize that families and individuals have multiple critical considerations regarding their assets. We carefully evaluate each ALP principle and execute appropriate strategies and tactics to ensure that assets are properly structured.

How is the Alpine approach different?

ALP Principles

The ALP Principles recognize that families and individuals have multiple critical considerations regarding their assets. We carefully evaluate each ALP principle and execute appropriate strategies and tactics to ensure that assets are properly structured.


At Alpine, we believe the traditional 60/40 model of asset allocation is dated and flawed for the discerning investor.

We take a practical approach that includes a fixed income liquidity bucket to provide cash flow when the market is down and avoid the need to sell equities at depressed prices.


Asset location compartmentalizes an investor’s wealth, placing it in accounts where it can most benefit from tax advantaged account structures.
This strategy seeks to optimize long-term returns by minimizing the wealth-eroding aspect of taxes on a portfolio.


Asset protection provides the structure to shield an estate from creditors, while protecting overall assets through insurance and tax strategies to minimize taxes on an estate.
Proper structure can include Irrevocable Trusts, Credit Shelter Trusts and even IRAs. Insurance may include property and casualty, liability, life, and today, cyber insurance. Tax strategies and estate plans are also critical to protecting assets.