Investment Process

We want to invest wherever money will be treated the best—emphasizing the most attractive asset classes, sectors and securities. We follow an all-capitalization strategy, seeking value in large, medium or small cap companies.

Security and Market Analysis

We generate investment ideas through fundamental research on primarily U.S. and Canadian listed securities.

Our portfolio managers and research analysts scrutinize securities utilizing information gleaned from myriad sources, including a universe of closely monitored stocks, filters and screens, outside research analysts, corporate regulatory filings, newspapers and periodicals, other like-minded investors and our diverse client and business contacts.

To assist our security selection, we draw on specialized independent research, such as a service that identifies sell-side analysts with the best track records and determines the “quality” of corporate earnings. We also subscribe to assorted research services to gain disparate market and macroeconomic perspectives.

Margin of Safety

Securities purchased at a meaningful discount to their intrinsic values, with a "margin of safety", should have lower downside risk. Buying a security at a large discount to its FMV also mitigates the risk in our business appraisal. To minimize inherent business risk, we want to purchase securities of strong companies meeting our fundamental criteria and to avoid those that have poor balance sheets or no earnings without the prospect for near-term earnings. We want companies with competitive advantages, barriers to entry or unrecognized valuable assets, and avoid those where predictability is difficult. We are attracted to companies with lower than average operational, financial and valuation risk.

Understanding What We Own

If a company appears undervalued, we analyze its business model, management, financial position and operating environment to understand it as best we can and we continually monitor our portfolio holdings in order to react to changes in business prospects.

Portfolio Construction

For a holding to meet our investment criteria, it must be undervalued relative to our appraised FMV and its FMV should be growing. Portfolios are generally focused, high conviction selections of securities influenced by our macro perspectives and may be concentrated in certain securities, sectors and jurisdictions depending on their attractiveness. Our portfolios have, for example, often been heavily weighted in oil and gas and gold stocks, and we have held large individual positions in those sectors. We may from time to time emphasize small to mid-cap companies (and we have often done so in the past) when we believe they offer a significantly better risk-reward opportunity than larger companies, often trading off liquidity for opportunity.

Model Portfolios

We manage each client account based on corresponding model portfolios, which are notional allocations of securities. The client’s investment mandate will determine the particular model or models selected to guide investment of the client’s portfolio. Each client’s investment mandate is determined in consultation with the client, in order to select a suitable type of account for the client’s specific objectives and circumstances. We then construct a portfolio of securities based on the applicable model(s). Generally, client portfolios will effectively mirror the holdings of the applicable model but may account for client-specific factors such as income requirements, tax-related considerations and investment requests or restrictions specified by the client. A particular client account’s holdings and weightings may also deviate from the model as a result of the composition of the client account and cash available to purchase new positions and/or market forces which impact whether specific securities will be purchased, sold, or held for a client account from time to time.

Perception of Risk

We strive to avoid permanent loss of capital.  Investments may, from time to time, experience temporary loss of capital from unwarranted short-term share price fluctuations.  Avoiding overpriced companies and recognizing when a company’s business model changes adversely can guard against permanent impairment.  Often, illiquidity from an emphasis on smaller companies can contribute unduly to an outsized fluctuation in price, in our view, a temporary impairment of capital.

Short Selling Strategies and Option Strategies

For hedging purposes or for investment purposes to take advantage of market opportunities, we may use short selling strategies or option strategies to the extent such strategies are appropriate and permitted for a client’s account.