Equity investment strategy
Our goal is to grow our client’s financial assets by purchasing companies we believe are undervalued. This approach serves a dual purpose. We believe buying undervalued assets is the best path to preserve our client’s investment, while also providing for above average capital appreciation.
Valuing a prospect company is where we start. We estimate value through an appraisal process that provides a fair value estimate for each company. We use a relative value approach – a bottom-up process that incorporates the assessment of a company’s growth prospects, market position, financial profile and risks to estimate an appropriate valuation. While we use most common valuation metrics, most of our appraisals are determined using cash flow. We use research provided by brokerage firms, but conduct our own analysis before purchasing a position.
Valuation estimates provide the framework for our investment decisions. We believe focusing on valuations provides a margin of safety for long term investors, instills investment discipline and helps remove emotion-induced moves that can result in “buying high and selling low.”
We are investors, not traders, and have a long term outlook when taking a position in a company. We may sell positions if we believe a company is fully valued, there is an adverse change in our risk/reward outlook, the positions becomes oversized or we want to take advantage of another compelling opportunity. We are tax aware and strive to make gains long term in taxable accounts and will use tax losses to offset gains if possible.
Portfolios are diversified from an industry and company specific level. We do not attempt to mimic the S&P 500 or any other index and typically have a sector/industry bias because of our valuation focus.
We invest primarily in individual companies. Most of our core investments reside in the large cap category due to our focus on cash flows, balance sheets and market position. We use mutual funds for our international and small cap investments.
