Our stock selection philosophy favours companies with solid management, healthy balance sheets, leading market positions, strong cashflows and well-positioned brands. These criteria can be met both by leading blue-chips and by smaller companies with niche positions, and they are to be found in a range of international equity markets. Our skill is to select the best-quality companies in each industry and sector. Our process starts with a number of screening filters to determine a universe of companies for further investigation. This universe is re-run on a monthly basis and, using our in-house systems and external research, is refined to the stocks we hold in our clients’ portfolios.
We analyse companies by forecasting future cashflows and measuring the cash returns against the capital employed in the company. Then we look for companies that focus on their core business with a leading competitive position and demonstrate the prospect of high organic sales growth relative to their sector.
Finally, we look to identify how a company can sustain its competitive advantage through patents, management, technology or brands. The timing of entry into the investment is established using a combination of technical analysis, news flows and monitoring revisions in consensus earnings estimates. From our filters we create a focus list of 30 to 40 stocks. The composition of portfolios is formally reviewed monthly.