Lane Five's investment philosophy and process derives from a simple core objective:

To find significantly undervalued companies and invest in them long-term.

Valuation, however, is a complex process. We believe the market is relatively efficient in the long-term, yet in the shorter-term stock prices may be very different from a business's true intrinsic value. Lane Five employs a very detailed and rigorous analytical process to determine intrinsic value.

We believe that a company's value, stated simply, is the present value of the future free cash flow of the company divided by the shares outstanding. Since the future is unknown, however, we attempt to make the most accurate possible forecasts by garnering intensive knowledge of a business, its competitive position, competitors, market size, products and processes, and business model. We create detailed long-term models of the business that allow us to run multiple scenarios through them and see what kind of cash flow would result from various sets of assumptions. We then value the company based on our best judgment of what is most likely to happen, but also based on our understanding of potential other outcomes and so-called "outlier" scenarios.

Our probability centered approach allows us to more fully understand the potential risks and returns to which we are exposing our portfolio. Our focus is primarily on the free cash flow centered approach to valuation, but we verify and triangulate these cash flow centric approaches with other valuation techniques, such as using a variety of multiples, private market values, break-up values, and other comparative methods. Our view is that if we use many valuation approaches, our likelihood of being correct is higher.