The Bastion Industrial and Infrastructure Portfolio is a domestic, long-term focused, low-turnover, roughly 30 stock portfolio that invests in high-quality industrial, infrastructure, and housing-related businesses at attractive valuations. Importantly, the businesses should be run by leaders that think and act like owners, and that are economically aligned with outside shareholders.
The vast majority of holdings will have already achieved scale, have healthy balance sheets (sometimes with net cash), have high and/or rising returns on invested capital (ROIC), stable or growing free cash flows (FCF), and high terminal values with long runways of per-share earnings growth. The rate of growth is less important than the duration of per-share growth (as long as the valuations are reasonable). We believe these businesses will have high barriers to entry, wide and sustainable moats, and several will operate in oligopolies or duopolies with high and stable market share, pricing power, and limited competition. Others will have leading market shares in highly fragmented industries providing opportunities for long runways of growth through both market share gains (organic growth) and consolidation/M&A (inorganic growth).
The businesses will offer strong value propositions and solve big, important problems. We’re looking to invest in companies that do hard things and do those hard things well. We’ve got to believe these businesses are resilient and adaptable with survivorship genes and an almost obsession with maximizing long-term business value per share.
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