Sources of information
We talk to a company’s management team, their competitors, suppliers, customers, other industry contacts, and sell-side analysts to put together a bottom-up, fundamental mosaic for a potential investment.
Isolate Unique Insight
After establishing our own fundamental outlook for a stock, we compare it to sell-side models and market expectations. We must have a variant perception to capitalize on sell-side errors or conservatism.
Our price target is driven by our proprietary fundamental forecast. We want upside of at least 15% over the next 12 months, typically without assuming an increase in its valuation multiple.
We add value through stock selection over time, not through sector weights. We control risk by limiting position sizes, controlling economic factor exposure, monitoring liquidity, and giving larger weightings to our highest conviction ideas.
Stocks are sold when the risk/reward is compromised. If fundamentals deteriorate or a stock reaches our price target, we aggressively sell positions.