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I N V E S TO R PR E S E N TATI O N
SABER FIRM OVERVIEWSaber Capital Management, LLC is an investment firm in Raleigh, NC that manages Saber Investment Fund, LP an investment partnership for high net worth individuals, families, and institutions.
Our investment approach is focused on making concentrated investments in undervalued stocks of high-quality, predictable businesses that can be expected to compound intrinsic value over time.
We align ourselves completely with our investors. John Huber has the vast majority of his personal net worth invested alongside clients. In addition, Saber earns no fee until investor returns exceed 6% per year.
Saber Investment Fund Fee Structure: 0% management fee; 25% performance allocation over a 6% compounding hurdle rate
WHY SABER?• Independent Thinking• Saber operates like a family partnership. Although we have outside investors, we are
free from the pressures that come from raising capital, allowing us to think and act independently without the “style box” constraints or diversification requirements that often handicap other investment firms.
• Return-Focused• Saber’s number one principle is to focus first and foremost on generating the best
possible results for the investment partners who have already entrusted us with their capital.
• We believe that sticking to this “results-first” principle will ultimately result in the best business results for our firm.
• Aligned Interests & Skin in the Game• John Huber has virtually all of his net worth invested alongside clients.• No management fee; 25% performance allocation over a 6% compounding hurdle• We only get compensated when you earn over 6% annual returns
SABER INVESTMENT GOALS
Saber’s two primary investment goals:
1. Protect capital from permanent loss 2. Outperform the S&P 500 by 5% per year over rolling 5-year periods
To achieve this two-fold goal, we adhere to the following investment principles:
• Stocks are pieces of businesses• Invest in companies I can understand (Circle of Competence)• Volatility creates opportunity• Guard against risk (Margin of Safety)• Focus on investing in only the exceptional opportunities
SABER INVESTMENT FUND, LP PERFORMANCE
SIF Gross1 SIF Net2 S&P 500
2014 10.54% 9.39% 13.69%
2015 7.35% 7.08% 1.38%
2016 42.21% 32.41% 11.96%
2017 41.60% 31.72% 21.83%
2018 (8.09%) (8.09%) (4.38%)
2019 54.80% 46.09% 31.49%
Compounded Annual Gain 22.62% 18.32% 12.03%
1 Gross return before performance allocation2 Net return assumes investment in the fund at inception with no additional contributions/withdrawals, 0% management fee, and a 25% performance fee over a 6% compounding hurdle
INVESTMENT PRINCIPLES
• Stocks are pieces of businesses• Think like a business owner, not a stock investor.• Our approach emphasizes thinking more about things that impact the long-term
value of the business and less about things that influence the short-term fluctuations in the stock price.
• Invest in companies we understand (Circle of Competence)• Pick your spots.• Focusing on simple businesses helps to avoid mistakes and minimize permanent
capital losses.
“I’m no genius. I’m smart in spots—but I stay around those spots.” – Tom Watson Sr., Founder of IBM
INVESTMENT PRINCIPLES• Volatility Creates Opportunity• The average stock price fluctuates by more than 50% between its yearly high and
low prices.• Since stock prices fluctuate much more than underlying business values do, there
are opportunities at times to buy stocks for less than their fair values.• Volatility is not risk. The likelihood of losing permanent capital is risk.
• Guard against risk• Focus on the high-quality businesses that can compound their intrinsic value over
time. • Owning quality businesses is an excellent way to mitigate risk because as time
passes, the underlying value of the business increases. • Regardless of the quality, the top priority is to demand a margin of safety (a large
gap) between the stock price and the underlying fair value of the business.
INVESTMENT PRINCIPLES
• Focus on exceptional opportunities• It is better (as well as less risky) to know a lot about a few investments than a little
about many investments.• Great investment opportunities are rare. Be willing to wait for them.• To achieve superior long-term results, an investor must take full advantage of his or
her best ideas while simultaneously avoiding marginal ideas or unnecessary activity.
“If it’s your [profession], diversification doesn’t make sense. It’s crazy to put money in your twentieth choice rather than your first choice. . . . Charlie and I operated mostly with five positions. If I were
running $50, $100, $200 million, I would have 80 percent in five positions, with 25 percent for the largest.”
– Warren Buffett, 2008
INVESTMENT STRATEGY
Saber’s primary strategy is to make concentrated investments in undervalued stocks of high-quality, predictable businesses that can be expected to compound intrinsic value over time.
This potentially creates appreciation from two sources:1. The growth in the intrinsic value of the business2. The market correcting itself (closing the initial gap between price and value)
“Leaving the question of price aside, the best business to own is one that over an extended period can employ large amounts of incremental capital at very high rates of return.”
– Warren Buffett, 1992 Shareholder Letter
INVESTMENT STRATEGY
A simple investment checklist is followed after conducting comprehensive research:
• Is the business easily understandable?• Prefer simple businesses with predictable earning power.
• Is this a good business?• High returns on capital, durable competitive position, consistent free cash flow,
attractive future prospects, conservative balance sheet, etc…• Is it well-managed?• Look for insider ownership and a management team that understands the
importance of capital allocation.• Is there a sizable gap between price and value?
INVESTMENT STRATEGY
Investments tend to fall into two main categories:
1. Compounders• Small to medium-sized businesses that produce attractive returns on capital and
have long-term growth prospects, which can lead to compounding earning power over time
2. High quality mature businesses at a discount• Mr. Market occasionally gives us the opportunity to buy high-quality, mature
businesses with stable free cash flow at a discount to the company’s fair value
KEYS TO SUCCESS (SABER’S EDGE)
The three most important advantages for Saber:
1. Long-term (“time-arbitrage”)2. Concentration 3. Patience
These words are cited by most investors as important, but are rarely implemented. Most people generally want results quickly, and the speed of information has increased the impatience that exists in markets.
John Huber’s own net worth is on the line alongside investors. Also, Saber is not burdened by institutional constraints such “asset-gathering” requirements or short-term performance demands.
KEYS TO SUCCESS—LONG TERM VIEW
• Long-term view (“time-arbitrage”)
• Average S&P 500 stock fluctuates by more than 50% between its yearly high and low price
• Large-caps can often become significantly undervalued due to near-term market or company-specific negative sentiment
• The strong incentive to produce short-term results is pervasive in the investment management world today
• We believe the biggest advantage for most investors is not an informational advantage, but rather the willingness to look out 3-5 years when most investors are focused on the next few quarters
“If you look at the typical stock on the NYSE, its high for the last 12 months will be [about] 150% of its low so they’re bobbing all over the place. All you have to do is sit there and wait until
something is really attractive that you understand.” – Warren Buffett, 2011
KEYS TO SUCCESS—LONG TERM VIEW
Stocks fluctuate much more than their underlying business values (even in the very largest companies). Volatility creates opportunities:
KEYS TO SUCCESS—CONCENTRATION
• Concentration
• Exceptional investment ideas are rare• The portfolio will generally have 80%+ of its assets in 5-8 stocks• The willingness to say “no” to marginable ideas helps prevent mistakes and allows
the portfolio to maximize the very best ideas• We believe it is less risky to focus on a small number of high-quality, undervalued
businesses (it is better to know a lot about a few things, than a little about many things)
“It’s not given to human beings to have such talent that they can just know everything about everything all the time. But it is given to human beings who work hard at it—who look and sift the world for a
mispriced bet—that they can occasionally find one.” – Charlie Munger
KEYS TO SUCCESS—PATIENCE
“I just wait until there is money lying in the corner, and all I have to do is go over there and pick it up. I do nothing in the meantime.”
– Jim Rogers
• We try to limit investments to only the most obvious, high conviction ideas• We believe most investors have a few great ideas, but they dilute those ideas with 15 or
20 ideas that they are much less convicted on• Our objective is to try and avoid the 15 or 20 good ideas and wait for the great ones• It is very difficult for most investors to go long periods without any trading activity• But the reality is that great investment ideas are rare• Saber’s patient, like-minded investor base allows us to concentrate on our best ideas
while also minimizing trading activity, which opens up much more time for productive research
VIGILANCE TOWARD RISK
• Saber’s top priority is to always focus on protecting principal • To achieve great long-term results, you must be willing to be patient and withstand
periods where value is scarce. • This means there are times when cash positions might be temporarily high• Prefer to be fully invested, but always demand a margin of safety with all prospective
investments and current holdings• Be patient: be willing to sacrifice short-term performance results in favor of capital
preservation—avoiding mistakes is the best way to create superior performance over the long-run
• Avoiding unnecessary activity
“All man’s miseries derive from not being able to sit in a quiet room alone.” – Pascal
SABER INVESTMENT FUND, LP• Service Providers• Auditor: Spicer Jeffries• Third-Party Fund Administrator: Liccar & Co. • Prime Broker: Interactive Brokers, LLC• Legal: Cole-Frieman & Mallon, LLP
• Minimum Investment• $200,000• Additional deposits can be made monthly• Quarterly Withdrawals
• Fee Structure• No management fee• 6% compounding hurdle rate• 25% performance allocation for profits over the 6% hurdle
CONTACT INFORMATION
John Huber Fund AdministrationManaging Partner, Portfolio Manager Liccar & Co. +1.919.610.6809 Maureen Murphy, [email protected] Director of Fund Administration
Auditor: Legal Counsel: Custodian: Prime Broker:Spicer Jeffries Cole-Frieman & Mallon LLP Wells Fargo Interactive Brokers
Saber Capital Management, LLCGeneral Partner
7621 Purfoy Rd. Ste. 105Fuquay Varina, NC 27526
www.sabercapitalmgt.com
DISCLOSURES
All information contained herein is provided “as is” and Saber Capital Management, LLC disclaims making any express or implied warranties with respect to the fitness of the information contained herein for any particular usage, application or purpose. Prior to making any investment decision, please consult with professional financial, legal, and tax advisors to determine the appropriateness of the risks associated with such an investment. No assurance can be given that the objectives of a particular investment strategy will be achieved or that an investor will receive a return of all or a part of his or her investment. All investments involve the risk of loss, including the loss of principal. Past performance is not indicative of future results.
Please see Saber Capital Management’s ADV form for more details regarding the risks of investing. Please ask for Saber Investment Fund’s Private Placement Memorandum and Limited Partnership Agreement for more information on the partnership’s investment offering.
