Kennon Green Enterprises is unique because it was founded by professional investors with the purpose of creating, acquiring, and growing a collection of ever-expanding operating businesses that would provide streams of cash for deployment into stocks, bonds, real estate, derivatives, arbitrage, and other capital market activities.  Grounded in a value investing philosophy, investment decisions are made at headquarters with operating decisions and day-to-day responsibilities for the operating divisions handled by their respective management teams.

Our primary goal when we show up to the office in the morning is to find the highest risk-adjusted rate of return for our shareholders’ capital.  We attempt to balance exposure to individual positions and industries by looking for non-correlated and complimentary assets.  Decisions are made based upon our firm’s opportunity cost and the availability of attractive rates of return in excess of a discount rate based upon a combination of long-term United States Treasury bonds and an inflation kicker.  This philosophy, combined with a management-owned holding structure, means that we are far more flexible than most other companies.

An example of how this approach benefits our business would be the credit crisis and resulting recession.  As the markets collapsed and the economy went into a nosedive, we authorized expansion of our e-commerce subsidiaries, increasing the size of our online businesses by more than 500% during the second quarter of fiscal 2009 and utilized the company’s substantial cash levels to acquire large blocks of stock and long-term derivatives on certain companies in which we wish to hold the underlying equity.  We want to buy assets that will make us substantially wealthier five and ten years from now, even if that means exposing ourselves to temporary paper losses in the short-term.  Our rock-solid balance sheet gives us this luxury.