How We Evaluate Investments
We seek investments with the following characteristics:
Earnings Growth
- Typically EPS growth of 15% or better
- Earnings Growth derived from a positive change in fundamentals
Valuation Disconnect
- Focus on companies whose valuation is not yet reflective of quality or magnitude of growth rate
- Discipline can provide a dual fold means of price appreciation and engenders an intrinsic level of downside risk protection
Catalyst
- Driver of change typically a function of internal factors
- Focused on growth drivers that are misperceived or not yet understood by Wall Street
Balance sheet strength
- Research leads to companies with strong balance sheets
- Low debt/capital, along with strong asset quality and cash flow allow companies to be in control of their operations and growth opportunities
Insulated macroeconomic risk
- Seek growth that is primarily determined by internal changes vs less-predictable macroeconomic conditions
- Avoid investing where factors such as fluctuations in commodity prices, currency exchange rates, and interest rates greatly inhibit earnings predictability