We believe above-market returns can be achieved with a combination of classical security analysis, modern quantitative investment techniques, and keen attention to trading. We focus on asset-rich companies, selling at relatively low multiples of earnings, with proven and confident management, earnings and price momentum, and favorable investor sentiment.
We invest in a universe of suitable, liquid stocks. We use our multi-factor valuation model to identify low-priced companies with effective management, positive momentum, and favorable sentiment within industry peer groups. Portfolios are fully invested, sector-neutral/ country-neutral, and well-diversified in terms of industry, fundamental characteristics, and various statistical measures of risk. Individual bets are controlled; number of positions can range from almost 50 to over 200 (per side). We seek to minimize implementation shortfall.
While we do not explicitly consider ESG factors in our valuation or risk process at this time, we can (and do) incorporate client-directed exclusionary screens. Our perspective on risk and portfolio management minimizes the variance of these portfolios relative to similarly managed portfolios. Further, our universe breadth provides attractive alternatives with similar risk and alpha prospects. While the types (and lists) of restrictions are directed by the client, they are almost entirely ESG-related.