Fixed Income Investment Process

Our fixed income investment process applies multiple strategies, with no one dominant style. We add value primarily through interest rate anticipation and yield enhancement strategies, and also incorporate relative value trade strategies.

Our fixed income selection process is based on a four-step, top-down portfolio management approach. The first step is developing a macroeconomic view, which consists of a thorough analysis of economic strength or weakness - the guiding force to the future path of interest rates and inflation. Next, through economic analysis we determine how to position ourselves on duration relative to the benchmark and decide where on the yield curve to execute our strategy. Drawing on the conclusions from the first two steps, we determine sector weights, industry weights and average corporate credit quality to pinpoint potentially attractive investments. Finally, using in-house credit analysis to indicate under- or overvalued bonds, we decide what type of bond structure to purchase with specific attention given to those issuers that are not heavily followed by rating agencies or brokers.

Equity Investment Process

Our equity investment process is based on value investing because it provides a consistent, statistically grounded approach to the analysis of investment opportunities. Designed to uncover companies with stock prices below fair market value, the research process begins by screening stocks using our proprietary valuation model. Based on criteria that focus on estimates of the long-term profitability of a company rather than short-term forecasts of earnings, we determine a fair market value for each company in the research universe.

After narrowing the universe of potential investments to companies with attractive quantitative factors, we undertake independent qualitative research, which is at the core of our selection process. This involves reviewing financial statements and meeting with company management. In addition, we use a variety of valuation metrics rather than limiting investment opportunities to a single touchstone of value.

Risk control is achieved by ensuring that all portfolios are widely diversified. We audit consistency by verifying criteria such as the median market cap, price-to-book value and price-to-cash flow to confirm that our portfolios’ financial characteristics are less expensive than the overall market.

Our valuation model not only provides the portfolio managers with new purchase candidates, but it also provides a warning sign when successful holdings become too highly priced. A comparison with current market prices highlights companies trading both below our estimate of fair market value (purchase candidates) and those above fair market value (sell candidates).

Trade Matching Statement

To view our trade matching statement, please click here