Philosophy

Our philosophy encompasses our view of the equity markets, how best to profit from them, how to hold onto profits, and the way we run our business.

Stock Market

We believe the stock market is reasonably efficient but emotional enough to provide opportunities for the disciplined investor. Because the market is complex, opportunities are best exploited with a systematic, quantitative approach. We use modern investment technology and academic research to complement the wisdom of classical investment thinking and analysis.

Investment Style

We are value-oriented but believe superior results are best achieved by combining value, management (quality and growth), and momentum. Our work holds security analysis to be most productive when relative value is gauged on an industry or peer-group basis. Indeed, peer-group valuation and diversification constitute important aspects of our process. We focus on well-managed companies with quality cash profits, relatively low market valuations, and positive price and earnings momentum. We optimize portfolios to diversify multi-faceted risks.

Implementation and Trading

We believe transaction-cost management is a vital component of the portfolio management process. Transaction costs — the ultimate cost of implementing any investment strategy — are higher and more complicated than is generally perceived. Controlling transaction costs is key to exploiting stock market opportunities.

Management Management*

Investing is our only business. We are independent and owner-operated.
We practice investment management in an atmosphere of candor and mutual respect, where patience and humor are the norm. We believe it is essential to forge a partnership with clients (and vendors). Detailed, frequent, and complete communication is highly valued. We aim to create goodwill that will help us endure unavoidable periods of subpar investment results.

*Hats off to Stan Calderwood of Trinity Investment Management for the description.