A: Our research process is driven by an economic view. We start with a macro-economic view and proceed to develop our views on various sectors in the economy. Such a process enables us to shape our additional research direction and specific security or stock research. Additionally, the economic outlook aids us in determining which sectors are most attractive at a given moment.
Then, we create a dynamic watch list of approximately 100 stocks from the universe of growth stocks whose historic earnings and/or cash flow growth is in excess of 15% over an economic cycle.
Criteria for inclusion on the firm’s watch list include positive earnings, appropriate debt ratios, market leadership, rising return on equity, increasing gross/operating margins and the alignment of managements’ interests with those of the shareholders.
As a further step, we employ valuation analysis, using a variety of fundamental tools supplemented by technical analysis, to choose the most attractively valued growth stocks from this internally generated watch list.
We typically choose 40 to 50 equities in each separately managed account customized to each client’s investment objectives. This number of securities allows us to diversify the risk and lower volatility while maintaining generally low portfolio turnover.
Our information collection process is varied and comprehensive. We review proprietary research, research reports from recognized sources, Securities and Exchange filings, company announcements and meetings, insider selling, breaking news, and other industry specific sources.