Our Investment Process
The investment decision-making process consists of four stages:
- Initial Qualification of companies for further research
Qualification criteria include:
• Prospects for superior near- and long-term growth in sales, earnings, and cash flow
• Quality of management
• Financial strength
• Competitive advantages of the company within its industry
• Stock liquidity - Intensive Research by analysts into qualified companies
• Qualitative assessments of the competitive structure of the industry and the company's position within it
• Estimation of durability of margins and growth rate
• Evaluation of business risk
• Analysis of risk factors related to domicile of operations
• Continual communication with managements of prospects and holdings
• Up to 900 discreet company interviews per year
• The completion of an in-depth assessment of the company's business and its growth prospects
• Sharing of all work among the analysts and portfolio managers for comment/criticism - Valuation of securities by analysts
• Projected earnings using the DuPont return on equity and Holt models
• Estimation of intrinsic value with dividend discount and discounted cash flow models
• Company fundamental or business mileposts established to track success of investment thesis
• Rated buy, best buy, sell or hold by the analyst to reflect relative stock price prediction vs. relevant industrial sector
• Research meeting convened by analyst including PMs and other analysts for formal presentation of stock - Construction of a diversified portfolio of stocks by portfolio managers
• Portfolio managers have full discretion on buy and sell decisions and security weights in their strategy
• Country and sector weights are the result of bottom up stock selection not top down allocation, weights are maintained within product guidelines
• Stringent sell discipline
• Portfolio risks and tracking error monitored by PM via risk factor model