We believe attractive long-term returns can be achieved by investing in companies when the current market price is at a discount to our estimate of intrinsic value.
Independent thought is a hallmark of our approach and an important underpinning of our success. Idea generation often comes from our investment team's experience and expertise. Having followed companies for many years, our portfolio managers and analysts possess deep knowledge and understanding of companies' competitive situations and appropriate valuation levels.
We use a discounted cash flow analysis over a long time horizon (e.g., five years) as our primary method to determine whether there is a discrepancy between the current market price and our estimate of intrinsic value. We not only search for stocks trading at a discount to intrinsic value but also businesses whose intrinsic value we believe will grow over time, thus adding to the upside potential.
Our largest positions are typically in companies that we believe have sustainable competitive advantages, conservative balance sheets and shareholder-oriented management teams.
Having a long-term investment orientation requires a deep understanding of sustainability — in business models, management teams and operating practices.
Our fundamental equity research process includes evaluation of all material risks and opportunities that could impact the value of an investment over the long term, including issues related to sustainability and ESG risk factors.