Investment Discipline We find great businesses at reasonable prices through extensive research.As long-time students of the stock market, Hendershot Investments has developed a database of valuation models to rank the relative merits of the companies we follow. We scour annual reports, SEC filings and corporate news releases to independently determine company valuations, thereby avoiding the pitfalls of herd-mentality investing. Listening to quarterly management conference calls keeps us abreast of corporate developments and gives us insight into the heartbeat of corporate leadership.We adhere steadfastly to rigorous buy and sell disciplines. Our number one rule on the buy side is “Don’t overpay for a stock.” Our focus on business fundamentals and valuation measures puts us solidly in the value camp of investors. However, we would rather pay a “fair price for a great business than a great price for a fair business.” As Philip Fisher stated in Common Stocks and Uncommon Profits, “If the job has been done correctly when a stock is purchased, the time to sell is almost never.” While we concur with the thrust of his statement which minimizes transaction costs, there will be occasions to sell. If business fundamentals deteriorate and the “problems” don’t appear temporary, we will sell the stock. Another reason to sell occurs when a stock’s price moves significantly ahead of the underlying business value. In this case, we will trim back the overvalued position.We believe in patient investing for the long term. Quintessential investor, Ben Graham, described the stock market in the short term as an imperfect voting machine where stock prices are based partly on emotion and partly on reason. In the long term, the stock market is a weighing machine where prices are driven by fundamentals. For this reason, we are willing to wait patiently until Mr. Market recognizes the value of our high-quality firms.