Process

Our ranking system reduces the universe of available stocks into a list with 150-200 candidates. These stocks are then ranked against one another and reviewed at our weekly research meeting. Names on the list we believe to be most attractive are then vetted by the following criteria:

QUANTITATIVE

  • Examination of historical ratios and multiples through the business cycle
  • Industry and Peer Comparisons
  • Margin of safety – upside to fair value even under conservative growth assumptions
  • Sell target/Intrinsic Value – based on projected earnings and discounted cash flow
  • Low leverage/Balance sheet strength

QUALITATIVE RESEARCH

  • Business Environment and Competition and Pricing Model
  • Operating Leverage of Business Model
  • Asset/Liability Analysis
  • Transparency of Financial Reporting and Communication
  • Management Integrity combined with Shareholder Orientation

EXECUTION

Analysts present new ideas and an investment thesis in weekly research meetings. Through group debate, the team assesses merits of the investment idea and determines if it is ultimately a business we want to own, and if so, why and at what price in relation to our estimate of fair value. Sell - or fair value - targets are set for each position.

Existing holdings are monitored on an ongoing basis. Quarterly earnings reports and company specific news items are reviewed soon after they are released.