Caledonia Investments (CLDN) investor relations material

Investment Philosophy and Strategy

• Focus on long-term, high-quality investments targeting inflation plus 3–6% returns over the medium to long term.

• Permanent capital structure enables patient, unconstrained investing and deep company relationships.

• Diversification through three main strategies: public companies, private capital, and funds, with allocations of 30–40%, 25–35%, and 25–35% respectively.

• Team incentives are aligned with shareholders, measured by NAV per share growth and rewarded in shares.

• No benchmarking or fundraising; absolute returns are prioritized over relative performance.

Portfolio Construction and Risk Management

• Portfolios are concentrated, typically 15–20 holdings, focusing on best ideas and deep understanding.

• Risk managed through quality assessment, position sizing (max ~10% per holding), and active top-slicing.

• Investment process includes detailed fundamental analysis, ESG assessment, and owner’s earnings modeling.

• Quality Matrix benchmarks investments on pricing power, business moat, owner mentality, and capital allocation.

• Portfolio turnover is low, with only one or two changes per year, emphasizing quality improvement.

Team Structure and Culture

• Six-person, highly experienced team with over 100 years of combined experience, 44 at Caledonia.

• Flat structure with equal voting on investment decisions; team rewarded on portfolio, not individual ideas.

• Culture emphasizes constructive challenge, long-term thinking, and continuous learning.

• Extensive direct engagement with company management, including site visits and off-cycle meetings.

• AI is used as a research tool, but in-person interactions remain critical for qualitative insights.