This article is excerpted from a letter by John Huber, managing partner at Saber Capital Management.

Marv Levy, my favorite all-time football coach often said “When it’s too tough for them, it’s just right for us!” The Hall of Famer’s motivational saying didn’t get my beloved Buffalo Bills to the pinnacle of the NFL, but it’s the attitude our partnership takes when stock prices are falling, and a year ago we made two investments in great businesses when the market got “tough”.

In total, we had five main holdings which made up about 80% of the fund’s assets. Each meaningfully contributed to our returns last year, which wasn’t surprising given the market’s tailwind, but it is nice to get production from a number of hitters in the lineup.

Our results over the years have been earned by investing in stocks of great businesses when they become temporarily mispriced. Though success going forward will not be easy, our approach is very simple. I’m convinced that long-term results don’t need to come from being original, finding underfollowed companies, solving complicated situations, or even generating unique insights. Great results come from acting on the very rare ideas that seem obvious, without diluting those great ideas with mediocre or even “good” ideas. When it comes to picking stocks, Good is the enemy of Great, not the other way around as Voltaire suggested.

So, we like the simple principles that are hardly unique: stick exclusively to businesses that are easy to understand, invest in companies that generate lots of free cash flow, partner with good management teams, and then the most important ingredient: wait, wait, wait. I think this last part – the waiting – is what separates the good from the great.

In his talk “The Art of Stock Picking”, Charlie Munger said the best investors “bet very seldom”. This remains the best piece of advice I’ve ever come across on the subject of portfolio management.

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