Using a combination of screening tools and qualitative assessment, we identify undervalued companies with a competitive advantage. We attempt to mitigate our investment risk by purchasing stocks where, by our calculation, the potential gain is at least three times the potential loss (an Upside reward-to-Downside risk ratio of 3:1 or greater). While our investments fall into three different categories - Leaders, Laggards and Innovators - all share the key characteristics of success:
DIFFERENTIATED PRODUCT OR SERVICE OFFERING
CAPABLE AND MOTIVATED LEADERSHIP
FINANCIAL FLEXIBILITY
Our experience, and performance record, has shown that the marriage of attractive valuation with these characteristics increases the odds of investment success.