We believe that long-term investment return and risk at the issuer level are defined by the interaction of two factors:
- Cash flow generation, distribution and reinvestment for growth, and
- Valuation dynamics in response to evolving fundamental prospects and risk sensitivity.
With these principles in mind, we seek investment opportunities across a spectrum of income, growth, and risk, encompassing a wide range of style and factor exposures.
We believe our long positions are designed to reflect above-average corporate performance and contained risk, while our short positions focus on high valuation and fundamental execution risk.
Portfolio structure will tend to be broadly diversified in long-only portfolios, but long-short portfolios may be more focused on the short side.
Fundamental data analytics are playing an increasing role in marketing, sports, politics, agribusiness, clinical trials, social sciences… and investment research.
We believe that an analytics-based approach can outperform traditional modeling and judgment, primarily because of breadth of coverage and reduction of bias.
Our process begins with risk and return models of yield, growth, and valuation, and synthesizes the output of those models into a set of selection decision rules used to develop candidates for portfolio implementation on both the long and short sides.
Every component of our process is designed to be both:
- In accordance with common-sense, best-practice investment analysis, and
- Subject to empirical validation.