A consistent, sustainable investment process is vital to weathering all economic climates. Ourinvestment philosophy’s strength is based on an unwavering commitment to invesng in quality businesses based on the principles of value invesng. We believe long-term investment success depends on sound investment philosophy and a repeatable process. Several essenal conceptsinform our investment philosophy and form the foundaon upon which we confidently invest our clients’ assets:• Intrinsic Value: We believe a stock’s worth is best determined by the underlying business’s long-term economics, not by what others are willing to pay in the short-term. • Margin of Safety: We determine an investment’s margin of safety by combining the quality of the underlying company and the discount from a conservave appraisal of intrinsic value offered by the price.• Long-term Time Horizon: We focus on achieving the best possible safe compounding of capital over many years rather than managing short-term volality.INVESTMENT PHILOSOPHYWe believe our philosophy is a raonal and intelligent approach to invesng. We buy pieces of companies in which we have a good understanding at prices significantly below their fair value.• We approach invesng in publicly-traded companies on a long-term basis as if we werebuying the company outright and retaining current management.• Our goal is to provide superior long-term returns for investors while aempng to minimize risk. An Owner’s INVESTMENT MANUALST. JAMES INVESTMENT ADVISORS
WE ADHERE TO THREE PRIMARY PRINCIPALS: 1. View stock as real ownership in a business2. Let the market serve you3. Invest with a margin of safetyINVESTMENT EXECUTIONSelecng a sound investment philosophy is crical. However, execung the philosophy creates investment returns. Our success depends on our paence and discipline to only invest in situaons that meet our criteria.INVESTMENT CRITERIAWe search for quality companies by targeng exceponal business performance combined with endurance.Business Staying Power: We only focus on companies that have staying power. We look for durable compeve advantages, pricing power above costs, a paern of disciplined reinvestment, an easy to understand business and strong balance sheets.Honest, Intelligent Management Teams: We want to partner with honest, intelligent management teams thattreat shareholders as partners. Management with exceponal skill, integrity, and passion. Indifferent to Wall Street's short-term focus. Compensaon raonally determined.Margin of Safety: We then only invest when we can buy a piece of the business substanally less than it is worth.Sell Discipline: We will sell if a company’s fundamentals deteriorate below our minimum business standard orif a business’s market price exceeds our esmate of full value. We will sell if a company can be replaced by a beer investment that allows an upgrade to the porolio's quality and overall valuaon.In summary, we look for well-seasoned companies with strong market posions and sustainable compeve advantages, commied and experienced management teams, which create long-term value and provide aracve returns.ST. JAMES INVESTMENT ADVISORS2