Investment Process
Our investment philosophy is to buy undervalued companies that offer solid long-term growth prospects. To identify these stocks we perform an extensive review process for each investment opportunity. The core of this discipline is a complete fundamental analysis of a company's products, financial statements and management. Our analysts travel the country to meet with executives and industry contacts to accomplish this goal. We want to understand the business, which sometimes means it can take not only a boardroom meeting but also a hard hat tour of the factory floor.
After our fundamental business review, we produce extensive financial projections to determine how much a company is worth. Along with the numbers, we spend a lot of time analyzing risk and current business trends. To be included in the portfolio, a stock must have twice the upside potential versus downside risk. In addition, a company must possess a positive business catalyst that can push the stock higher over the next 12 months.
We like to be long-term investors and typically will hold stocks as long as they are undervalued and the business fundamentals are intact. If a company is not meeting our performance expectations, we do an extensive review to determine if the business fundamentals have changed. Our team constantly monitors investment positions with the goal of providing upside participation with downside protection.
Todd C. Ahlsten, Portfolio Manager
"After hearing about the company, I called Trex’s headquarters to start the investment process... After discussing the company’s financials statements and business plan over a cup of coffee, CFO Paul Fletcher handed me goggles and a pair of earplugs and we entered the manufacturing facility."