We employ a disciplined and consistent investment process across all portfolios.

  1. Narrowing

    The universe of exchange-listed stocks is greater than 10,000 companies. To ensure quality rather than quantity, we narrow the list using several tools and maintain an ongoing list of companies with good business models.  The current list has approximately 300 companies, but companies are added and dropped from the list regularly.  We also run keyword searches on the major newswires to highlight corporate events that may unlock value. Additionally, we run computer screens to look for companies repurchasing their stock or increasing their return on invested capital.

  2. Preliminary Reading

    To determine which companies merit more thorough analysis by our investment team, we read through the earnings releases and the conference call transcripts of the companies we’ve found in the initial screening.

  3. Fundamental Research

    We use several sources to gain a complete picture of the company and its business. We review the annual reports and focus on the CEO’s letter to shareholders, read the securities filings, build a financial model, and perform an industry review. During this process, we test our initial hypotheses through interviews with management. Finally, we try to get the “scuttlebutt” on the company by talking to our industry contacts and former employees of the company.

  4. Write Investment Thesis

    We write a 2-5 page investment thesis for the company.  Our analysis  to help focus our thinking about the company may highlight weak areas in our analysis and deter us from purchasing the stock, or may serve as a future reminder of the reasons that led us to purchase the stock.  Many potential investments are discarded at this stage. If we can’t write the investment thesis it causes us to rethink the idea. 

  5. Potential Investment vs. Existing Holdings

    Our team determines if we have a greater level of comfort and/or a greater potential return in the new investment.

  6. Implement Investment Idea

    We change our model portfolios and then begin to purchase the shares across client accounts.

  7. Continual Holdings Review

    We constantly review our portfolio holdings to determine if the business franchises are getting stronger or weaker. We also monitor growth rates and expectations to ensure our holdings are performing as expected.

  8. Sell Discipline

    Although we intend to have a long investment period with each of our investments, we don’t hesitate to sell an investment when we realize our capital is in danger. In this case, we try to reduce our position and reassess once we gather more information. We will also sell investments when we disagree with management decisions or if there is emergence of new competitive threats. Our favorite reason to sell an investment is when we find a new investment that has a better risk/reward balance.

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