A short note on how I invest
For twelve years I managed the international investment portfolio at Al-Jomaih Holding in Riyadh — multi-asset, built from a standing start, invested almost entirely in US assets. I then founded Mosaic Capital Management, and from 2015 to 2025 managed discretionary portfolios of US-listed stocks for private clients, including a decade-long flagship mandate. Mosaic’s approach is simple: buy world-class businesses, don’t overpay, and let compounding work its magic. It grew out of the direct equity portfolio I ran in-house at Al-Jomaih, and I’ve practised it for over twenty years and written about it publicly under my own name.
What I do is not complicated. I look for world-class businesses and watch for the moments when one of them suffers a temporary setback. That is often when I buy — at less than fair value — and then I wait patiently. I do that with a concentrated portfolio, typically no more than twenty names at any one time, almost all of them US-listed.
What makes a business world-class
One thing above all: a long record of growing free cash flow per share — at a high rate and, more importantly, predictably — with a long runway still ahead. That predictability is what makes a business world-class, and it is why such businesses are seldom priced cheaply. The checklist below exists to guard against the only risk that really matters: that the compounding stops.
- A durable moat and real pricing power
- High and sustainable returns on capital
- Growth that needs little new capital — what Buffett called economic goodwill
- Abundant free cash flow and a strong balance sheet
- Management that treats shareholders’ capital as its own
- Easy to understand, hard to make obsolete, never a commodity producer
Three ways free cash flow per share compounds — the first does most of the work
Grow the cash flow. Apple · Mastercard · Fair Isaac · Lam Research. A durable moat, high returns on capital and real pricing power do the work. Rarely cheap, and worth waiting for.
Shrink the share count. O’Reilly Automotive · Dillard’s. A good business, priced modestly, using nearly all its cash flow to retire its own stock. The modest multiple is what makes the buyback work.
Buy the cash flow. Constellation Software. Small, mission-critical businesses bought at a steep discount to the acquirer’s own multiple.
When I buy
A share price is not a valuation; it is a set of expectations. When an exceptional business hits a temporary setback — a soft year in an end market, a quarter that disappoints — expectations reset violently and the price can fall far further than anything that has happened to the business warrants. The only question then is whether this is a temporary dislocation or a permanent impairment of the business’s quality and predictability. Telling those two apart is most of the job — and it is where the best entry prices of a decade come from. Lam Research, which I published in 2018 when the market was pricing it as a cyclical, is the example I use, because every date in it can be checked.
I also buy at fair value: when I am confident that free cash flow per share will at least double within five years, conservatively. At an unchanged multiple, the share price can do the same.
When I sell
Mainly when the thesis has changed — when the quality, the predictability or the growth has been permanently impaired. Then I sell unemotionally. Second, when a stock has become richly priced and there is a better opportunity elsewhere in the universe, so the cost of continuing to hold it is too high.
The discipline is not never to sell. The discipline is never to pay for expectations that cannot be met.
For discussion purposes only. Not investment advice.