Patient Investing
Enduring Value

Passionate specialists in Canadian and US small/mid cap stocks.

Our Partners

The following suppliers strengthen our offering to our clients.

Research.

All our investments are based on an internally developed investment thesis. We focus on the cash flow generation capability of a business and derive our target prices based on our own estimates and forecasts. This process has been honed over time. Our financial models are complemented by conversations with management teams, their suppliers and their customers.

Concentrated Conviction.

We hold positions for 3–5 years on average and concentrate our portfolio on a select group of companies. We look at each holding as a business with an owner’s mindset as opposed to simply a stock. By owning fewer investments, we are concentrating our time and energy on our best ideas.

Discipline.

We focus on the areas of the market that we understand well and will refrain from chasing popular trends.

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INVEST WITH US

Independence. Focus. Performance.

Our Philosophy

At Tonus Capital, we like to look where the crowd isn’t looking. Our philosophy is rooted in a disciplined, patient, and value-driven approach to investing and the best way to find true value (a buck for fifty cents) is to hunt off the beaten path. By focusing on the long-term strengths of a business rather than short-term trends of the market, we can capitalize on temporary mispricing of securities. Our commitment is to our process and to the long-term alignment of our interests with that of our clients.

Our Approach

We employ a strict bottom-up investment approach, meticulously analyzing a universe of up to 5,000 individual small- and mid-cap companies in the US and Canada. We seek companies with robust business models that may currently be undervalued. Our core principles include:

Patience and Prudence: We invest your capital with extreme patience, sometimes analyzing companies for years until we get the good buying price to initiate a position.
Contrarian Thinking: We are drawn to companies whose stock prices have recently declined. We avoid popular trends, preferring to invest when a company is unpopular but holds significant, unrecognized value.
Long-Term Horizon: Our investment decisions are made with a long-term view, typically looking three to five years, or more, into the future. We believe that true value is realized over comparable timeframes, and we encourage our partners to evaluate our performance with this perspective.
Risk Management: We place a strong emphasis on downside risk and invest when we see a high probability of asymmetric returns where upside potential is multiples of the downside scenario.
Independent Analysis: We leverage our ability to think independently, to prioritise our own work over third party research and to arrive at a buy price for a stock that is underpinned by the earnings power of the underlying business.

We believe that our ideal partners share our mindset, resisting emotional impulses during market downturns and recognizing these periods as potential opportunities for strategic investment.