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OUR INVESTMENT PROCESS

Independently we run a fundamental and quantitative model, then create a buys list of the convergence of research. This enables us to identify securities we believe are undervalued by utilizing two unique processes. We then optimize the securities to create the strategic allocation.

While adhering to the strategic asset allocation ranges of the portfolio for a 3 to 7 year market cycle, we reflect the predefined risk tolerance from a neutral position and meet investment objectives over a full market cycle. We then implement our quantitative tactical overlay strategy which is a 3-6 month time horizon and expresses views resulting in temporary deviations to generate expected excess returns or to reduce risk.

We offer two additional overlay strategies for the taxable and/or social conscience investor. For taxable investors we overlay our tax harvesting strategies to increase the tax alpha. For the social conscience investor we are able to screen out organizations that violate certain constraints determined by the client.

OUR QUANTITIVE MODEL APPROACH

Our Analytic Risk Measurement tool provides a statistically sound and scientifically tested methodology for measuring the economy’s influence on investment prices. This can be used to reduce downside volatility, and insulate against world events. More importantly it can accomplish this without needing to choose economic or political scenarios, or having to guess the future direction of the economy. The model is designed to protect against economic risk, navigate through economic turmoil, and harness the power of the changing economy.

FUNDAMENTAL PHILOSOPHY

We believe that value creation is a function of how efficiently shareholder capital is utilized and recycled into future growth. The portfolio identifies and invests in businesses whose ability to grow operating assets is significantly greater than that which is implied by their common equity prices. We look for enterprises whose capital structure efficiency is under appreciated, or whose price to adjusted book value is compelling. We pay particular attention to the relationship between ROIC and Price/Book searching for businesses whose income generating asset base is under estimated or under appreciated. In a very real sense we utilize a classic private equity toolbox to identify and exploit mis-pricings in publicly traded equities.

FUNDAMENTAL APPROACH

We utilize a quantamental investment model that systematically replicates a large investment research staff. The model construction relies heavily on traditional fundamental logic, and analyzing financial statements that provides an understanding of a company’s operations, market expectations, and risk considerations. It provides an objective view of over 20,000 companies worldwide. We are able to run multiple valuation scenarios, assess the risk-to-reward ratio of companies, and understand market expectations and investment potential. It examines accounting information, converts it to cash, and then values that cash. This allows us to survey the entire corporate capital structure, and identify key drivers of value. The Company Analyzer allows us to peer through accounting complexities, and quickly get to what’s important. We can easily make apples-to-apples comparisons between peers, and ultimately this helps us accurately assess the market expectations across an industry group.

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