Value Investing

Our investment process combines macroeconomic themes and general market analysis with a
bottom-up approach which emphasizes security selection based on our fundamental research.

Macro Views

Our macro views of the economy and the overall market influence our asset and sector allocations.  We encourage prospective clients to review our past quarterly letters, all of which are available on our website and which provide an historical overview of our economic and market views, and our investment strategies over time.

Bottom-Up Approach

We construct our portfolios through the selection of individual securities which meet our value criteria. As value investors we tend to be contrarian, investing in undervalued companies that are temporarily out-of-favour but misunderstood, or that are under-followed and lesser known.  We then patiently wait until the market realizes their true values. Our main fundamental criteria for value include: good business franchise; consistent earnings and prospects for earnings growth; low price relative to our appraised Fair Market Value (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.

Fair Market Value

We calculate a security’s intrinsic value or FMV based on the present value of the company’s expected cash flows, adjusted for debt and working capital. We also compare our computed FMV to private market valuations, i.e., what a potential acquirer would pay for the entire business.