The Kennon-Green & Co. Credo

Our Responsibility to Our Clients

We believe our first responsibility is to our clients who have entrusted us with the privilege of managing their wealth. We must never forget that the capital placed under our stewardship represents their hopes, dreams, sacrifices, and good fortune. We must remind ourselves that they rely upon the principal and income from the portfolios we design, construct, monitor, and maintain on their behalf and that we are fiduciaries who must act in their best interest. To encourage and reinforce this obligation, we must seek to align our incentives with the interest of the client, maintaining a culture that puts us on the same side of the table as much as possible. Fees should be fair, simple, and easy to understand. Whenever appropriate, we should be willing to take on the risks and rewards to which we expose our clients by investing a meaningful amount of our own personal liquid net worth in portfolios employing the same strategies, and holding securities similar, and in many cases, identical, to those selected for client portfolios of a similar mandate. We must conduct ourselves and our operations with efficiency and integrity in all things. We must be our own harshest critics, demanding high quality in everything we do. Sensitive information must be safeguarded. Systems must be built with redundancy. When required or in the client’s best interest, we must value transparency. Otherwise, we must act with the utmost discretion. Conflicts of interest should be disclosed immediately. Client questions or concerns should be addressed promptly. The Managing Directors and Investment Committee should regularly communicate their thinking.

Our Responsibility to Our Employees

We are responsible to our employees. We must view each and every person who works for us as an individual with inherent human dignity, recognizing their merit and accomplishment regardless of seniority or rank. We must provide equality of opportunity in employment, development, and advancement for those who are capable, qualified, and willing. We must ensure that employees are competent, dedicated, and that their decisions and actions are just and ethical. Compensation must be fair, adequate, and apportioned in a manner that permits all employees to participate in our successes, not solely those at the top. Working conditions must be clean, comfortable, safe, and sufficient for the task. We must foster an environment which encourages substance and candor, including ensuring employees are free to make suggestions or highlight dissatisfaction without fear of reprisal. We must behave in a way that makes employees feel secure in their jobs and income. We must remain aware of the family responsibilities of employees, striving to help them meet those obligations and enjoy a rich and fulfilling personal life outside of the office.

Our Responsibility to Our Communities

We are also responsible to the communities in which we live and do business, the broader civilization, and the world. We must use the Firm’s resources and influence to protect, encourage, and fight for human rights, including doing what we can to maintain responsibly-regulated free markets. We must develop and support civic improvements and charitable causes. We must nurture the arts and sciences. We must encourage rationality and education to help our fellow citizens live better lives. We must do our part to preserve the environment, including being mindful of our use of natural resources and improving the property entrusted to us. We must pay our share of fair and reasonable taxes. The communities in which we live and work must be better for having us as citizens than they otherwise would have been. Concurrently, we must remember that our fiduciary duty to the client comes first. If we encounter a situation in which our morals conflict with either the best interest of the client or a course of action the client wishes for us to take, we must promptly notify the client and seek a resolution. In doing so, our integrity must never be for sale.

Our Responsibility to Our Owners

Finally, we are responsible to our owners. A business exists to generate a satisfactory profit. We must build and maintain adequate reserves that provide stability during the inevitable storms that will arise, frequently without warning. We must innovate and constantly improve so we are best-in-class in whatever we do. We must reinvest for future growth, fund capital expenditures, conduct research, and, while experimenting with new ideas and methods, never stray from our conviction that conservative fundamental analysis is the only sound basis upon which to invest both client and Firm assets. We must stay true to our insistence upon a margin of safety and prudent diversification no matter what fashions or follies may sweep Wall Street or Main Street, even if it causes us to appear antiquated or become unpopular. Indeed, we must maintain fierce independence of thought, be willing to suffer the derision of our competitors, and lose clients to those who would whisper falsehoods in their ear rather than behave in a way that violates what we know to be right based upon sound analysis and timeless principles of value. In the end “this too shall pass” and the reality of math cannot be ignored. If we do these things, our owners should enjoy a fair return.