Investment Process

We employ quantitative screening utilizing Cash Flow Return on Investment (CFROI) data from HOLT that adjusts for varying accounting methodologies, applications, and distortions, as well as for inflation. This allows us to understand a company’s wealth creation proposition.

The Fundamental Research is the most important part of the process. This stage allows us to identify those companies with Defensible Business Models and Superior Management Teams. We use a Proprietary Investment Template used to ensure consistency across potential holdings. Our process can be paused at any point due to a variety of reasons and saved in the Research Library.

Then we conservatively project future cash flows for the company based on our fundamental research. This allows us to compare warranted equity value to what the market is currently pricing in.  If  the market is implying a significant deterioration in profitability for this high quality company, the dislocation presents an investment opportunity.

A holding becomes a candidate for sale if valuation no longer offers the same compelling risk / reward. Other reasons include a significant change in strategy or management; or an exogenous event that causes the thesis to materially change.