Our Process

Our process flows directly from our philosophy and focuses on combining macro market environment analysis with focused fundamental research on individual companies to construct portfolios of quality, large-cap growth stocks. The stocks held in our portfolios represent the stocks of innovative companies with superior franchises, balance sheets, and managements.

The table below offers a closer look at the steps of our disciplined, repeatable investment process. Click a step for further details.

Step 1: Idea Generation

Step 1: Idea Generation

Ongoing Research Dialogue:  Country/Sector Analysis

Our investment process begins with a daily assessment of markets, research items, geopolitical events, and economic conditions.  Our investment professionals bolster their understanding of the prevailing investment backdrop with discussions and visits with corporations and their directors, often with Chief Executive Officers and Chief Financial Officers.  In addition, our investment personnel utilize a global network of macro, policy, and industry experts to explore issues in greater depth.

Relative Price Strength 

In conjunction with our ongoing appraisal of the investment landscape, we employ two screens to assist with portfolio construction.  Through one screen, we look at the performance of countries, regions, sectors, and stocks versus their respective Index.  This proprietary Relative Price Strength Screen identifies how each of these groups is performing within the context of the Index in which they reside.  Based on 12-month price momentum, these screens allow us to attempt to identify which areas are outperforming the Index, which are underperforming the Index, and which are in some form of transition.  This screen is a key indicator of investor behavior.

Quantitative Fundamental Company Scoring – Quintiles

An additional screen quantitatively ranks the fundamental factors of individual companies.  Each company is given a score of 1 to 5 (5 being the highest score, 1 being the lowest) based on their Quality, Growth, and Value characteristics.  Also, an overall score is assigned to each stock.  The results of the overall scoring process place each stock into the appropriate quintile.  Our targets for emphasis in client portfolios reside in the 3rd, 4th, and 5th quintiles.

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Step 2: Fundamental Research

Step 2: Fundamental Research

Company Assessment

As our fundamental research moves to individual companies, our efforts center on the quality of the company’s franchise, management, financials, and growth prospects.  We also focus on the valuation of the company’s stock to determine whether the pricing of the stock is congruent with the company’s earnings growth rate.   We invest in companies where we have the most confidence that their rate of growth is superior to industry peers, above consensus, and sustainable.

Macro Economic & Geopolitical Backdrop

Our analysis also includes the global macro economic and geopolitical backdrop which provides the context for our investment decisions. While utilizing the news, markets and research to which all companies have access, we bring two specialized resources to our appraisal of current events – our Portfolio Management team and our Advisory Board.

Investment Theme Development

Our consideration of the macro economic and geopolitical backdrop also allows us to begin developing investment themes to include in our portfolios or confirm themes that currently exist in our portfolios.  These themes may include such things as the effects of technology and innovation, demographics and consumer behavior, or government policy.  In identifying these themes, our goal is to focus on clusters of stocks that will benefit from their inclusion in these structural shifts.

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Step 3: Portfolio Construction

Step 3: Portfolio Construction

Portfolios Focused on Quality Growth

We create portfolios with three specific types of growth in mind: emerging, strategic, and secular.  Emerging growth companies are on the lower-end of the large market capitalization spectrum and have been identified as rising stars in their industry or sector.  Strategic growth stocks are companies that are expected to show near-term outperformance or are benefiting from current fundamental market trends.  Secular growth stocks are the foundation of our portfolios and consist of companies that are seen as global champions.  These secular growth stocks represent high-conviction, low-turnover positions that are held to withstand market noise.

Portfolio Allocations

Allocations in portfolios are based on our overall assessment of the current market environment combined with our conviction in country, sector, and stock trends. Allocations are monitored on an ongoing basis to ensure that our investment strategy is being implemented effectively and portfolio risk parameters are maintained.

Sell Disciplines

We sell a position in our portfolio for two general reasons, deterioration in fundamentals and deterioration in technical factors. The former could include disruption of an investment theme, erosion of growth and/or valuation, or a better alternative to a current holding. The latter could include emergence of new market leadership, failure of a position’s relative price strength, or a significant interday downward price movement versus the broad market.

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Step 4: Risk Management

Step 4: Risk Management

Portfolio Allocation Risk Control

The prevailing market environment is one of the important drivers of each portfolio’s risk profile. Portfolio allocations are monitored on a daily basis to ensure that they reflect the outputs of our investment process and strategy decisions.  Allocations are also monitored to ensure that each portfolio is oriented to a large cap, quality, growth style.

Risk Control Tools

We use our proprietary environmental indicator to closely monitor market behavior. In a market of clear investment leadership and trends, our positioning will be narrowly focused, while more diversified positioning will be applied in times of uncertainty and heightened negative prospects. We also analyze the performance of Style Factors within the markets and monitor the portfolio’s risk profile on a monthly basis.

Structured Reviews of Portfolios and Risk Exposures

Our investment management team also participates in a rigorous schedule of investment meetings to ensure that the team discusses strategy and risks on a regular basis.

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