Although our form is corporate, our attitude is partnership. We think of our shareholders as owners - partners, and of ourselves as managing partners. We do not view the company itself as the ultimate owner of our business assets but instead view the company as a conduit through which our shareholders own the assets.
In line with Drasendorf’s owner-orientation, our director has a major portion of his net worth invested in the company. We can guarantee that your financial fortunes will move in lockstep with ours for whatever period of time you elect to be our partner. We have no interest in large salaries or options or other means of gaining an “edge” over you. We want to make money only when our partners do and in exactly the same proportion. Moreover, when we do something dumb, we want you to be able to derive some solace from the fact that our financial suffering is proportional to your.
Our long-term economic goal is to maximize Drasendorf’s average annual rate ofgain in intrinsic business value on a per-share basis. We do not measure the economic significance or performance of Drasendorf by its size; we measure by per-share progress. Intrinsic value is an all-important concept that offers the only logical approach to evaluating the relative attractiveness of investments and businesses. Intrinsic value can be defined simply: It is the discounted value of the cash that can be taken out of a business during its remaining life.
Our preference would be to reach our goal by directly owning a diversified group of businesses that generate cash and consistently earn above-average returns on capital. Our second choice is to own parts of similar businesses, attained primarily through purchases of marketable common stocks.
We use debt sparingly and, when we do borrow, we attempt to structur e our loans on a long-term fixed-rate basis. We will reject interesting opportunities rather than over-leverage our balance sheet. The financial calculus that we employ would never permit our trading a good night’s sleep for a shot at a few extra percentage points of return. We’ve never believed in risking what our family and friends have and need in order to pursue what they don’t have and don’t need.
Our “wish list” will not be filled at shareholder expense. We will only do with your money what we would do with our own, weighing fully the values you can obtain by diversifying your own portfolios through direct purchases in the stock market. We are interested only in acquisitions that we believe will raise the per-share intrinsic value of Drasendorf’s stock. The size of our paychecks or our offices will never be related to the size of Drasendorf’s balance sheet.
We will be candid in our reporting to you, emphasizing the pluses and minuses important in appraising business value. Our guideline is to tell you the business facts that we would want to know if our positions were reversed. We owe you no less. We also believe candor benefits us as managers: The CEO who misleads others in public may eventually mislead himself in private. At Drasendorf you will find no accounting maneuvers or restructurings nor any “smoothing” of annual results.