Focused Growth Equity

Investment Philosophy

We believe that exceptional returns can only be achieved by structuring portfolios uniquely from the market indices, thus we limit portfolios to 20-25 stocks, concentrating on our best ideas. By focusing on industry leading companies led by strong, visionary management teams, we expect to achieve above average returns. We seek companies that dominate their respective industries and, through sound business strategies, are likely to continue that domination well into the future. Thus, when selecting companies, we have a minimum time horizon of 3 years.

The principal tenets of our philosophy and the important criteria used to select companies include strong management teams and sound business strategies that will capitalize on the company's core competencies. We look for companies with candid, experienced, honest cultures and industry leading products or services that are needed and have no close substitute. We seek to own firms with visible earnings, revenue and order growth for extended periods of time. It's also important to know if peers view the company positively and, if a factor, the governmental regulation and/or control environment is positive (we want to own companies with tailwinds not headwinds). We also want to own simple, easy to understand companies with clear and straight-forward financial statements. Finally, a reasonable valuation is desired based on conservative discounted cash flow analysis.

A critical part of our process is to assess the strength and character of a company's competitive advantage, or "economic moat". Our preference is solid moats that are getting wider. After determining the breadth of the economic moat, the single most important factor in evaluating a company is to understand the corporate culture. We believe that buying companies with the right team of people properly motivated will help lead to investment success. Cultures can be evaluated by closely watching how they handle adversity and changing business conditions. In order to evaluate the culture, we gather information from trade shows, quarterly conference calls, company publications, independent "grass-roots" research, and if necessary, company visits. Those companies that come through our thorough analysis are ranked and presented to the Investment Strategy Group.