Security Selection

We seek the following business attributes across our ideas:

• Duopolies or monopolies
• Pricing power
• Strong brand loyalty
• Leading relative market share
• Non-cyclical, recurring revenue
• High incremental margins
• High ROIC
• Network effects
• Large addressable markets
• Good governance

Criteria based on 10+ year history and standard deviation filters

Historical and relative multiples:

• P/E
• P/Sales
• EV/EBITDA
• P/FCF
• Dividend Yield

Customized FactSet DCF/Company Assessment tools allow for rapid assessment of valuation and earnings reporting risk

Technical analysis less to predict where an asset may be going than to understand its risk attributes and relative performance

• The degree of momentum or deep value imbedded in the name
• Where support levels vs. resistance likely exists
• How long it has based or grown into its multiple or gapped down
• Risk management (check 200-day moving average)
• Market conditions in which the security has outperformed or underperformed