Philosophy/Process
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1 Know what you own
- Fundamentals drive stock prices over long-term
- Quality, Transparent Companies
- Little to No Debt, Strong Cash Positions
2 Know what you're paying for growth
- Invest in ownership interests of companies
- Determine "Enterprise Value"
- Avoid hype and momentum stocks
3 Know the "Growth Story"
- What is the catalyst for growth?
- Why do we want to own it here?
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WE OWN
- Growing revenue
- Margin expansion
- Catalyst verifiable from outside sources/channel checks
- Transparent, clean balance sheets
- Enterprise value at discount-to-growth rate
- Long-term earnings power
- Self-Funded (Organic Grower)
WE DON'T OWN
- Nontransparent businesses (i.e. Banks)
- Companies with no earnings (i.e. Biotech)
- Financially leveraged companies
- Hype/momentum companies
- Companies fully priced at forward growth rate
- Companies simply because they are in an index
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