We take a private equity approach to investing in public equity markets

Our Investment Process

We are fundamental, bottom-up business appraisers who rely on our proprietary, in-house research. We build portfolios that are concentrated in what we believe to be our most qualified investments.

Since 1975, we have applied an in-depth research process, drawing upon insights from our nearly five decades of experience, extensive global network and rigorous decision-making process. We are fundamental, bottom-up business owners. Our research is driven internally by our global investment team. We seek to build portfolios that are concentrated in what we believe to be our best investment ideas.

Step 1

Source thousands of ideas worldwide

Our global team of generalists are tasked with finding the best bottom-up ideas regardless of sector, market cap or geography. The team has a formal regular smaller regional team meeting as well as full global team meetings to review existing and prospective investments, and collaborates informally on a daily basis. The team sources new ideas in a myriad of ways, combining a quantitative screening process to define and narrow the universe with a qualitative assessment overlay and vetting through our extensive network.

  • Screen on price metrics, buybacks, insider purchases, new low lists, etc.
  • Eliminate certain areas we typically avoid
  • Leverage global network of management teams, boards and executives to gain insight
  • Generate target list of companies to appraise and monitor
People Business Price

Step 2

Research hundreds of qualified companies

Analysts conduct an in-depth qualitative and quantitative review of companies from a Business, People, Price point of view. Companies must meet a minimum criteria for business quality with potential for value creation by capable management teams.

  • Review integrity and track record of People
  • Assess quality and sustainability of Business
  • Assign valuation and determine discount to current Price
  • Generate report for qualifying ideas to share with team

Step 3

Debate dozens of prospective investments

At this stage, the entire research team reads the report and extensively debates each potential investment, drawing upon all available internal and external resources to thoroughly vet the case.

  • Team debates idea based on Business, People, Price case
  • Meet management team and board
  • Vet through our global network of competitors, current/former employees, supply chain, industry experts, legal and banking contacts, our clients, etc.
  • Devil’s advocate (DA) challenges investment case

In many ways, our approach is more comparable to how private equity invests than to the strategies of most public equity managers.

G. Staley Cates, CFA

Vice-Chairman, Principal

We actively manage and monitor our portfolio, adding to and trimming positions to increase the margin of safety and qualitative positioning of the portfolio, while adhering to strict portfolio guidelines.

Final portfolio

15-25 companies

After the originating analyst and the DA have answered all open questions on the investment case for a business, the team determines if the company meets our Business and People criteria and next determine the Price we are willing to pay. The full team is involved throughout the investment process, and portfolio managers for each strategy make final decisions.
  • Companies that meet Business/People but not Price join on-deck list
  • Establish position, typically starting at 2-5%
  • If fully invested, team determines what to sell to fund a new qualifier
  • Concentrate in portfolio of best ideas
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