Principles
HHR’s investment framework is guided by five core principles, helping assess risk and opportunity while supporting informed, long-term decision-making.
Dead Men Walking
This principle applies to companies with structural challenges and declining adaptability. While not in immediate financial distress, they show early signs of deterioration in revenue, efficiency, and market position, often struggling to adapt to changing market conditions. The “Dead Man Walking” principle reflects a risk-focused perspective, highlighting potential loss of competitiveness and performance over time. These type of shorts typically do not need any public awareness to become profitable, the target company’s weknesses work for themselves.
Skeletons in the Closet
This principle applies to companies with latent or legacy risks from past governance, compliance, or historical issues. While operations may appear stable, unresolved matters—such as litigation, regulatory scrutiny, or reputational vulnerabilities—can affect long-term performance. The “Skeletons in the Closet” principle emphasizes proactive risk identification and monitoring of hidden exposures. When their little secret is exosed to public, such companies drow down fast.
Outright Fraud
This principle applies to companies with material inconsistencies, opaque reporting, or irregularities that may indicate misrepresentation. While financial metrics may appear strong, further analysis can reveal gaps or anomalies. The “Outright Fraud” principle reflects a research-based risk perspective highlighting potential extreme downside, without implying legal judgment or wrongdoing.
Rising Stars
This principle applies to companies with high growth potential in expanding sectors. They typically have strong fundamentals, scalable business models, and disciplined capital allocation, while remaining under-recognized by the market. The “Rising Star” principle highlights opportunity-driven investments with favorable risk/reward dynamics.
Dominance of the Fittest
This principle applies to companies with structural competitive advantages and industry leadership, capable of sustaining high returns across market cycles. They demonstrate resilient operations, strategic foresight, and adaptability, creating long-term value. The “Dominance of the Fittest” principle reflects durable market positioning and sustained performance.