U.S. Equity
Mid Cap Core

Investment Process

Selection Universe

• Approximately 1,500 companies with market capitalization between $1 Billion and $20 Billion

Discovery

• Identify situations subject to material upward revisions over time
• Establish multiple working hypotheses
• Open-ended, flexible

Quantitative research

• Employ multiple valuation tools
• Leverage expertise with long-term discounted cash flow (DCF) model that adjusts GAAP numbers to better reflect economic reality
• Compare market expectations for revenue growth and profitability to internal expectations
• Identify strategic imperatives in order to focus subsequent research efforts
• Evaluate multiple scenarios, disciplined

Fundamental research

• Focus on variables that have the greatest potential to impact valuation
• Understand the company’s unique competitive advantage and business model
• Seek evidence that both confirms and disconfirms the investment thesis

Macro research

• Understand higher level themes that may affect the thesis such as industry conditions, demographic trends, supply and demand conditions, etc.

Portfolio Construction

• Leverage the best ideas through the largest portfolio weights
• Compare research ideas to existing holdings; more attractive ideas replace existing holdings

Buy Criterion

• Estimated intrinsic value is substantially greater than market value

Sell Criteria

• Intrinsic value is realized by the market (price objective achieved)
• Significantly better alternatives exist
• Assessment of fundamentals changes

Masthead photo source: 2005 NASA