INVESTMENT PROCESS
Step 1: Quantitative Analysis
We rate the stocks in our universe according to our proprietary quality rankings model using the following factors:
Step 2: Qualitative Analysis
We believe quality companies defend and maintain high returns on capital through proven / durable competitive advantages, such as:
Portfolio companies referenced above are chosen solely to serve as examples of the factors they represent and are not a recommendation of any securities.
Step 3: Valuation
We understand that a company’s market value is comprised of its invested capital and discounted future economic profits:
- A company only creates value if its return on invested capital (ROIC) is greater than its cost of capital (COC)
- If the ROIC is less than its COC the company destroys capital and market value should be less than invested capital (these are stocks we look to avoid)
Step 4: Portfolio Construction
