Overview
Portfolio managers construct a model portfolio for each of our strategies, which is made up of stocks of businesses that are under-priced relative to our estimates of their intrinsic values. Our analysts devote considerable time and effort to qualifying, researching, and valuing companies, sometimes monitoring potential investments for several years before recommending their purchase to portfolio managers. In the case of the International Small Companies Strategy, the analyst conducts initial screens on market capitalization and relative valuation to qualify stocks for further research.
In order to be included in our portfolios, an investment must meet a stringent set of fundamental criteria:
- Growth – prospective growth of revenue, earnings and cash flows
- Management – track record of successful management with a clearly articulated business strategy and a suitable regard for shareholders
- Financial Strength – financial resources, business-appropriate balance sheet and borrowing capacity, and free cash flow generation
- Competitive Advantage – high and growing margins, sustained by durable competitive advantages
The investment must also enhance the portfolio's prospective risk and/or return and must also be attractively priced in comparison to alternatives.