Investment Philosophy.
As a student-managed investment fund it is of the utmost importance that our investment philosophy is focused, disciplined, and structured to not only make informed investment decisions, but to also teach our members the building blocks of investment analysis and portfolio management. We are long-only equity fund managers that follow a bottom-up investing approach with an eye on global economic developments. Our goal is to ensure that we follow our philosophy in order to allow for the optimal growth of capital with limited risk exposure. In other words, we want to maximize our investment returns while following strict risk limitations. The core of our investment philosophy is based on our emphasis on value. We look for investments that present value in business operations, value in the cost of the investment, and value to our portfolio as a whole.
Value in Business Operations
The businesses we look to invest in are normally cash generators that value shareholders and are in the mature stage of their business life cycle. Each business should have supportive catalysts for revenue growth and value drivers that lead to a competitive or comparative advantage over their peers, ultimately creating an economic moat. The most important factor in our analysis is management and we look for management teams that are proven leaders, strategic planners, critical thinkers, and experienced professionals.
Value in the Cost of the Investment
Unlike several other student and professional managed funds, we tend to spend a considerable amount of time analyzing the valuations market participants place on companies instead of modeling expected cash flows. There is a place for both types of studies in the financial analysis process, but we believe in a detailed and deep understanding of financial performance and consequently looking at value market participants assign to that performance, and subsequently how that value has changed over time based on statistical and significance testing. Lastly, we strive to make sure that our defined catalysts for business growth and future financial success provide an opportunistic time for entry based on this historical trading data.
Value to Our Portfolio
A company may be an extraordinary company, well run, with strong financial performance, but when you compare it with the other investments in your portfolio it may not be a great investment. Understanding Modern Portfolio Theory is detrimental in portfolio management because it teaches you the investment implication of diversification. We seek to find investments that not only meet the criteria outlined above, but also fit well in our portfolio based on a thorough analysis of historical trading data that looks to capture information on elements such as return, volatility, and correlation. None of our potential investments will be added to our portfolio unless they meet a rigorous series of tests from our Portfolio Management Group an our Chief Risk Officer.
Value in Business Operations
The businesses we look to invest in are normally cash generators that value shareholders and are in the mature stage of their business life cycle. Each business should have supportive catalysts for revenue growth and value drivers that lead to a competitive or comparative advantage over their peers, ultimately creating an economic moat. The most important factor in our analysis is management and we look for management teams that are proven leaders, strategic planners, critical thinkers, and experienced professionals.
Value in the Cost of the Investment
Unlike several other student and professional managed funds, we tend to spend a considerable amount of time analyzing the valuations market participants place on companies instead of modeling expected cash flows. There is a place for both types of studies in the financial analysis process, but we believe in a detailed and deep understanding of financial performance and consequently looking at value market participants assign to that performance, and subsequently how that value has changed over time based on statistical and significance testing. Lastly, we strive to make sure that our defined catalysts for business growth and future financial success provide an opportunistic time for entry based on this historical trading data.
Value to Our Portfolio
A company may be an extraordinary company, well run, with strong financial performance, but when you compare it with the other investments in your portfolio it may not be a great investment. Understanding Modern Portfolio Theory is detrimental in portfolio management because it teaches you the investment implication of diversification. We seek to find investments that not only meet the criteria outlined above, but also fit well in our portfolio based on a thorough analysis of historical trading data that looks to capture information on elements such as return, volatility, and correlation. None of our potential investments will be added to our portfolio unless they meet a rigorous series of tests from our Portfolio Management Group an our Chief Risk Officer.