Investment Philosophy

At Keystone, three main principles constitute our core investment philosophy. These principles transcend investment strategies and apply to all aspects of the operations of our firm, including investment due diligence, risk mitigation, and portfolio management.

MARKET INEFFICIENCES

Principle #1: Address Market Inefficiencies. Private markets by nature are generally much larger and have more inefficiencies than public markets. At Keystone, we seek where possible to exploit market inefficiencies in a particular market or sector. Examples of timely investments driven by identified market inefficiencies include Keystone's significant purchases of Chapter 13 bankruptcy claims in 2010-2011, acquiring and investing in thousands of apartments units in 2010-2012, developing new apartment projects in 2012-2013 as prices for acquisitions soared, acquiring over 500 single family rental homes in 2010-2014, and investing heavily in equipment leasing when banks were not highly active in the sector. We have consistently found inefficient segments in the private markets where capital was constrained and attractive, risk-adjusted returns could be generated for our investors.

DOWNSIDE RISK

Principle #2: Manage Downside Risk. Perhaps it’s because several members of Keystone’s due diligence team are CPAs by background or maybe we are just conservative by nature, the primary focus at Keystone is often more on the downside risk of each investment than the upside potential. We seek to understand what could negatively impact the performance of each investment and strive to mitigate such risks as far as possible.

TRANSPARENCY

Principle #3: Demand and Deliver Transparency. At Keystone, we believe in full transparency into each investment and deliver that same transparency to our investors. We obtain transparency through extensive due diligence, internal control procedures, and ongoing monitoring activities. We deliver transparency to our investors through detailed reporting, financials, and personal communication.