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Maintaining a Long-Term Orientation Amid Heightened Volatility

Amid significant market volatility due to the COVID-19 pandemic, we remain steadfast in our commitment to our investment philosophy. With a foundation in long-term structural tailwinds, resilient businesses and strong operators, our approach is designed for not only good times but challenging ones as well. Acknowledging the unprecedented nature of these circumstances and the uncertainty of a global health crisis, we thought a few words about our investment approach and how the investment team is spending its time would be appropriate.

We are cognizant the current crisis has dynamic macroeconomic implications and is driving significant short-term market fluctuations, but these factors do not change our investment philosophy or our analytical process. Our approach is distinctly focused on idiosyncratically driven investments and a long-term orientation. We maintain a high bar on business quality, which includes adept management teams with steady hands through times of turbulence.  In this environment, the effort we put into developing relationships and confidence in management teams via consistent strategic conversation should pay off. Our calendars remain filled with management team discussions, focused on understanding the fundamental impact on business models and end markets. We are using these discussions to think critically about structural implications, if any, to the long-term prospects for these businesses. It’s important to carefully consider how much of a business’s value is determined by any single three- to six-month period. Without losing focus on the micro, we are fully engaged in assessing how equipped small businesses are to endure this period and their potential to one day be large.

Importantly, from a business continuity standpoint, our New York-based investment team has taken the necessary precautions to ensure the safety and well-being of its professionals. Travel and in-person meetings have been temporarily replaced with conference calls and video conferencing. Given the amount of outbound travel in our research process, the team is accustomed to working effectively from remote locations. We are confident we are upholding the necessary standards to maintain a safe environment and operate with minimal disruption. To date, there has been no material impact from the pandemic on our team or critical functions.

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