Pay The Right Price

Our valuation analysis determines a price range relative to the long-run economic earning power of a business that would enable an investor to achieve an acceptable expected total return over a  multi-year period.   Valuation is determined on an absolute basis as well as relative to other available opportunities.

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Risk Management

We identify the highest quality companies with competitive advantages and with little individual business risk. We believe that a focused portfolio of these companies which maintain strong market positions and little to no debt will experience less market risk than a traditional portfolio, provided that they are purchased at attractive prices.

 

 

Identify Sustainable, Competitive Advantages

The goal of the research process is to identify companies with business models that possess enduring competitive advantages and control over their markets.  This analysis must lead to a high level of conviction that these protections can be sustained going forward for a security to be considered for investment.                  

 

 

A Business Analyst Approach

We seek to understand the advantages and vulnerabilities of a business so that we can accurately assess its value. Our research process begins with an analysis of the company’s financial statements.  In the balance sheet, we look for companies with high intellectual capital and low physical capital. This typically results in low debt and high free cash flow. In the income statement, we look for companies with lower overall fixed costs as this leads to earnings that are more durable and stable. In the cash flow statement, we look for companies with abundant cash generation so significant capital investment is not required to fund operations and growth which increases management’s ability to focus on shareholders.  We also thoroughly and consistently review regulatory filings, press releases, and industry data.