We aim to protect and compound capital over the long term at lower risk and with higher returns than any passive strategy.
Valuations of businesses based upon long-term modelling are highly subjective and prone to error. We have focused on building the specific expertise to identify businesses that earn a high and sustainable return on their starting capital and retained capital in a way that is understandable, which we can observe in our monitoring programmes. These economic moats allow us to build long-range models and make valuation assumptions that we have confidence in. We then combine that with a high margin of safety in the price we are willing to pay to take account of the risk of error and the inherent unpredictability of the future. If that price is not reached, we don’t act.
A deep understanding of why a business has a sustainable competitive advantage and why its customers choose to use it, and will continue to do so, takes a long time to acquire and can require a lot of focused work, including fieldwork and a good understanding of human behaviour and motivation. We look for businesses to collect as future opportunities and not for current investments, which gives us the time to build that knowledge which we will need to call upon should a valuation opportunity suddenly open. That willingness to devote considerable analytical time and resource to businesses that aren’t current investment opportunities is unusual, but essential for our approach.
We back managements with integrity and pay attention to alignment and competence. We seek out great managers who have built winning cultures.
We have a willingness, even a propensity, to do nothing, letting the internal rates of return in the businesses we hold create the long-term investment returns and waiting for opportunities to act whenever they may come. This means we will have years without making investments and our cash position may build. We believe not being compelled to act and a willingness to hold cash in the absence of opportunity gives an edge to outperform a continually fully-invested benchmark.
To summarise our philosophy, if you have the expertise to identify some businesses that have high and sustainable returns on their capital that can be owned for the very long term, and you have the patience to wait and only invest in them when they trade so cheaply that it covers your risks of error, and you don’t care about what the share price will do in the short and medium term, and you are backed by investors who understand and support that, then you have an advantage over most other investors of all forms. If you stick to businesses that you know well and then watch business in action and monitor how the world is unfolding in comparison to the assumptions you have made in your assessments, then you can reduce your risk of error further. If you do everything in a framework that is able to incorporate errors as learnings, then you will improve with time.
We aim to protect and compound capital over the long term at lower risk and with higher returns than any passive strategy.
We believe that markets occasionally misprice businesses, usually due to an overweighting of short-term factors in what are very long-term securities, to such an extent that a very attractive investment opportunity occurs offering high risk-adjusted returns. These can only be seized by the prepared mind and so we seek to put ourselves in that position.
At the heart of our investment operation is a team dedicated to the understanding, analysing and monitoring of businesses and industries. We are students of business and investing and because of the unusual structure of the group, we are able to create a fusion of the best ideas and knowledge from the worlds of business, investment, private equity and venture capital. Part of the team’s work and professional development involves operational and analytical work inside companies that we have investments in. This includes the businesses we control and those we have minority holdings in. The depth and quality of this work gives us a considerable edge. It is a team of diverse and capable brains selected, developed and organised in a way to make the most of that collective wisdom. We also draw up on an ever-widening network of expertise from many fields and industries that has developed throughout our history.
A partnership built on honesty, consistency and trust. We have always considered our investors to be partners, and our aim to treat you how you would like to be treated has been at the heart of how we do business since the launch of our first fund. Our approach only works if we partner with capital that understands and is comfortable with our approach, including the volatility that comes with concentration, the usual superficial unattractiveness of the things we buy, and the long timeframe over which our approach needs to be judged. At the same time, we are highly transparent in a way that allows investors to look through performance to underlying values and consistency of our approach.
We consistently apply the same investment framework and continuously improve it by learning from when it fails. That consistency of approach and continuous improvement has resulted in a declining error rate, as our judgements improve and our filter weeds out more errors before we make them.
We consistently apply the same investment framework and continuously improve it by learning from when it fails. That consistency of approach and continuous improvement has resulted in a declining error rate, as our judgements improve, and our filter weeds out more errors before we make them.
Founded in 2024, Kana Capital is a privately held, long duration investment holding company inspired by the investment philosophy and organisational design of Warren Buffett and Charlie Munger’s Berkshire Hathaway.
© 2025 Kana Capital Limited