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Research is conducted by all members of our investment team. Because we believe in a process that is highly interactive and team oriented, we have built a small, tightly-knit team in which portfolio managers collaborate closely with analysts and share a common understanding of the research task.
Research undertaken by the analyst may include: financial analysis of the company and its competitors, customers and suppliers; field work to visit plants, stores or other facilities; attendance at trade shows or conferences; in-person or telephone conversations with company management, customers, suppliers and competitors; analysis of industry data or other information compiled by government agencies, industry associations or independent research organizations; close reading of public filings by the company and its customers, suppliers and competitors. We may occasionally purchase independent research reports by industry experts or research organizations. Our analysts also have access to sell-side research, which they use primarily as a source of data or information, not for purchase and sale recommendations.
The analyst summarizes his understanding of a company’s prospects in a proprietary five-year forecast of the company’s income statement, balance sheet and cash flow. We rely on this estimate of the company’s long-term earnings power as our primary valuation metric. This forecast provides the basis for a team discussion of the investment’s merits and risks. We refer to this discussion as "research review," the outcome of which is an investment decision. During research review the team discusses the normalized earnings forecast, the assumptions on which it is based and the risks and sensitivities to which it is subject. The team also discusses other items that may be relevant to an investment decision including timing considerations, corporate governance and liquidity.
> Philosophy > Process
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