Our Investment Style
Fundamental and Technical
We use fundamental analysis to determine a stock’s intrinsic value. We seek undervalued stocks that we expect to outperform the market over the long term.
We use technical analysis—the interplay of stock price and volume with broader sector and market trends—to determine an appropriate time to invest or divest.
Bottom Up
We seek out companies with favorable social or financial “stories” before we begin in-depth research. Because product, management style, and corporate behavior are crucial for us, we tend to seek out and research individual companies first, later analyzing the prospects of their sector and industry. This approach, particularly prevalent in social investment research, is called bottom-up investing.
Initially, we prepare a corporate profile consisting of the company’s financial statements, publicly available reports, and selected financial ratios. Following this, we study reports compiled by others and complete a thorough periodical search on the company and industry. We almost always talk with the CFO or other company officials to gain their perspectives on our research findings.
Value and Growth; Contrarian Approach
Our investment strategy results in a blended portfolio of value and growth stocks.
The value stocks we purchase are typically bargain-basement stocks that are selling cheaply relative to their historical relationship to underlying fundamentals, such as book value, dividends, cash flow, and earnings. Such out-of-favor stocks are often referred to as “contrarian.”
The growth stocks we buy are of companies enjoying above-average earnings growth. Although some of these issues are popular on Wall Street and may appear overvalued according to some measures, they often result in superior performance over the long term.
Long-Term Holding Period
Our investment philosophy is based on a long-term perspective. In order to allow us to implement our investment strategies, we encourage our clients to leave their accounts under our management for at least three years or a market cycle.
Each portfolio generally contains stocks of 15 to 25 companies. Our normal rate of turnover ranges from 10% to 40% per year.
Equity and Balanced Accounts
Depending on risk tolerance and other characteristics, our clients may be in equity portfolios consisting entirely of stocks or in balanced accounts consisting of a mix of stocks and taxable or tax-free bonds. Typically, our accounts are fully invested, with 80–95% of the account in securities. The rest will be in cash or in secure, liquid equivalents.