Investment Philosophy

It is our belief that strong investment results may be achieved through bottom-up, strong stock selection with minimal exposure to risks associated with market timing or factor bets. Our stock selection philosophy is at the heart of our process. We believe that a company's stock price should reflect the present value of its long-term future cash flows. By looking beyond any near term issues and understanding the long-term "normalized" earnings power of a company, we can take advantage of the temporary mis-pricing of stocks. This philosophy and disciplined approach to investing has been in place since 1986 and has been successful in both positive and negative market environments.  
 

Investment Process

Proprietary information advantage
The cornerstone of our investment process is our team of buy-side research analysts. Our career equity analysts, all industry specialists, devote 100% of their time to making bottom-up earnings, cash flow and dividend forecasts for each of the companies in our research universe. When making forecasts, our analysts emphasize normalized earnings and long-term growth rates.
 
Systematic valuation
The dividend discount model (DDM), our fundamental valuation model, incorporates both the current price of a stock and our analysts’ estimates to derive each stock’s dividend discount rate (DDR) - our determination of a stock’s internal rate of return. Using the analysts’ input into the valuation model, stocks are ranked into quintiles within their respective sectors based on the DDRs. The most attractive stocks are ranked in the first quintile, while the most overvalued stocks are ranked in the fifth quintile.
 
Portfolio construction
Each analyst selects the most attractive stocks within their sector. Portfolio holdings are concentrated among stocks that analysts regard with a high degree of confidence; those in which they believe will realize projected valuations and deliver better risk/reward outcomes. Helge Skibeli oversees the portfolio with a disciplined approach to portfolio construction, focusing on risk management and intelligent risk-taking.
 

Distinctive Strategy Characteristics

  • Commitment to extensive, well-resourced research: A strong focus on fundamental research since 1986 and a global research budget of over $150 million a year.  Analyst teams are located around the world, providing insight and a strong framework for our investment process.
  • Experienced and stable research team: Our platform is supported by the deep knowledge and insights of our U.S.-based career sector specialists, combined with the global industry perspectives of our world-wide research team.
  • Systematic valuation plus informed conviction: Stock positions are based on valuation rankings driven by long term forecasts of future earnings and cash flows, as well as the analyst’s level of conviction that a stock’s valuation is realizable and its risk-reward relationship compelling.
  • Seasoned oversight and rigorous debate: The Director of Research oversees the U.S. Analyst Large Cap Core strategy with a disciplined approach to portfolio construction. Responsibilities include retaining the strongest investment talent, and intensely challenging sector specialists on key assumptions as well as ensuring our best investment insights are fully captured in the portfolio.
  • Managing risk, relying on our strengths: Stock selection is our primary driver of excess returns. We isolate this alpha source from risks associated with market timing and sector bets, striving to stay fully invested and allowing only modest deviations in sector weightings relative to the benchmark.
 
  Analyst Large Cap Core
Inception date
January 1997
Benchmark
S&P 500 index
Sector weights
+/-4%
Stock weights
+/-4%
Holdings
75~125*