Tarpon deploys a very disciplined investment philosophy, which is based on the following key principles:

Focus on intrinsic value – Tarpon believes that in the long run, intrinsic value and market value tend to converge. Tarpon selects investments based not on our view of an asset’s market price in the short term, but on our own conservative assessment of that asset’s intrinsic business value relative to its current market price.

Contrarian approach – Tarpon understands that significant differences between intrinsic value and market price are more likely to be found in overlooked and under-valued investment opportunities. Therefore, our research focuses on investments that are outside the radar of traditional investors for any number of reasons, including low liquidity, complex corporate structures or poorly understood business models. At the end of the day, Tarpon aims to make an assessment of a target company’s intrinsic value irrespective of what the market thinks. If our analysis concludes that the prevailing discount is unwarranted by the identified issues, we will likely make an investment. Large corporates like CVRD or Petrobras are not part of Tarpon’s portfolio.

Portfolio concentration – In order to maximize the potential gains to its investors, Tarpon tends to seek a relevant exposure (larger positions can represent up to 20% of the Funds) on the investment opportunities it finds most attractive. The relatively low number of companies in our portfolio also allows us to devote substantial time and effort to gain a deep understanding of each investment through significant interaction with company management, clients, suppliers, competitors and other relevant parties. Tarpon is, in most cases, the largest minority shareholder in its investments, and as a result, a more active involvement is deployed. In other cases, Tarpon may also hold a seat on the board.

Long-term owner perspective – Tarpon understands that the convergence of an asset’s market price and intrinsic value may sometimes require a longer time frame. The Company makes investments based not on asset’s performance over the next month or quarter, but on our expectations of value creation over a 3 to 5-year period. Our long-term orientation is evident in the very low turnover rate of the portfolio (c. 20%).

Tarpon’s sophisticated investor base and own permanent capital are key to executing this strategy, allowing us to pursue opportunities beyond other investment managers’ reach because of the short-term mandates and unstable capital commitments of their investors.

High-conviction. Deep understanding of the management, operations and stakeholders of each invested company. Our goal is to be the most educated shareholder, securing a high level of confidence and conviction in our decisions.

Investment Process

Our investment process is divided into four basic phases: screening, building the investment thesis, investment approval and monitoring.