Our investment approach combines macroeconomic themes and general market analysis with a bottom-up approach which emphasizes security selection based on our fundamental research. Our macro views of the economy and the overall market influence our asset and sector allocations.
We want to invest wherever money will be treated the best—emphasizing the most attractive asset classes, sectors and securities. For most Growth (i.e., equity) mandates, we follow an all-capitalization strategy, seeking value in large, medium or small cap companies.
As value investors we tend to be contrarian, investing in undervalued companies that we believe are temporarily out-of-favour but misunderstood, or that are under-followed and lesser known. For a security to meet our investment criteria, it must be undervalued relative to our estimate of its intrinsic or fair market value (“FMV”). Our main fundamental criteria for value include: good business franchise; consistent earnings and prospects for earnings growth; low price relative to our appraised FMV; expectation for significant growth in FMV; free cash flow generation; efficient balance sheet, i.e., optimal use of debt; high return on capital; strong management team; and competitive market position.
The four pillars of our investment process assist in our investment analysis and trading decisions, including our risk management process. These include quantitative tools we have developed to aid and complement our analysis, selection and trading of our investments. Our implementation of these methodologies is not a “black box” process. Rather, these proprietary tools are used in conjunction with our bottom-up fundamental research and overall macro outlook.