The rule is simple enough to fit on an index card, which is more or less how it started: if he can't write the reason for owning a stock in one sentence, on one card, the position doesn't go in the fund.
It sounds like a gimmick until you see the discipline it enforces. Complex, multi-part investment theses — the kind that require three caveats and a spreadsheet to justify — get rejected by the rule automatically, regardless of how compelling the underlying math might look.
A constraint that does the arguing for you
He's turned down positions his own analysts were confident in, purely because neither he nor they could reduce the thesis to a single clean sentence without leaving something important out.
The fund's returns haven't beaten the broader market every year — some years they've lagged it. But its volatility has stayed consistently lower, which he attributes less to stock-picking skill than to a rule that quietly filters out the investments most likely to be misunderstood by the person making them.