Core Principles
Our investment experience, supported by decades of academic research, has led us to a core set of investment principles that we believe are foundational for successful long-term investing.
Value
Value is our first principle. This includes several valuation metrics based on a company’s revenue, profits, and free cash flow.
Quality
We seek high-quality companies. For us, high quality includes attractive profit margins and high return on invested capital.
Momentum
We prefer stocks with strong price momentum. A stock’s momentum is based on its trailing one-year return.
Low Risk
We favor low-risk stocks over high-risk stocks. Low risk is a combination of short-term and long-term price volatility.
Value
Value is our first principle. This includes several valuation metrics based on a company’s revenue, profits, and free cash flow.
Quality
We seek high-quality companies. For us, high quality includes attractive profit margins and high return on invested capital.
Momentum
We prefer stocks with strong price momentum. A stock’s momentum is based on its trailing one-year return.
Low Risk
We favor low-risk stocks over high-risk stocks. Low risk is a combination of short-term and long-term price volatility.
Disciplined Process
Our four-step investment process creates highly diversified portfolios focused on our core investment principles. We review and rebuild the portfolio monthly to incorporate all new data.
Investment Universe
Systematic Evaluation
Private-Equity Modeling
Portfolio Optimization
We start with 2,500 U.S. public stocks representing over 90% of U.S. market capitalization and including large-, mid-, and small-cap companies.
We then rank all 2,500 companies on fundamental performance dimensions, including core investment principles of value, quality, momentum, and low-risk.
Using our private equity experience, we then project future cash flows for all 2,500 companies, producing a view on expected future returns.
Finally, we create a new portfolio that buys about 400 of the most attractive stocks and sells short approximately 400 of the least attractive stocks.
Investment Universe
We start with 2,500 U.S. public stocks representing over 90% of U.S. market capitalization and including large-, mid-, and small-cap companies.
Systematic Evaluation
We then rank all 2,500 companies on fundamental performance dimensions, including core investment principles of value, quality, momentum, and low-risk.
Private-Equity Modeling
Using our private equity experience, we then project future cash flows for all 2,500 companies, producing a view on expected future returns.
Portfolio Optimization
Finally, we create a new portfolio that buys about 400 of the most attractive stocks and sells short approximately 400 of the least attractive stocks.
Unique Differentiators
By combining private equity experience with a systematic approach, we have built a differentiated strategy. We seek attractive returns that don’t simply follow the broader market’s movements.
Private Equity Experience
Our core investment principles of value, quality, momentum, and low risk were developed over 25 years of private equity investing.
Cash Flow Projections
We systematically model 12-year cash flow projections for all 2,500 companies in our universe, providing a unique perspective on expected future returns.
Strategic Short Selling
Rather than expecting to profit from short selling, we use short positions to provide up to 100% additional capital for our long positions.
Risk-Adjusted Market Allocation
We seek to protect capital and increase returns by adjusting market allocation from 90% long to 30% short using valuations and market internals.
Tax Aware Execution
We seek to reduce the typical tax burden of hedge fund strategies by combining our long-short strategy with tax-aware implementation.
Private Equity Experience
Our core investment principles of value, quality, momentum, and low risk were developed over 25 years of private equity investing.
Cash Flow Projections
We systematically model 12-year cash flow projections for all 2,500 companies in our universe, providing a unique perspective on expected future returns.
Strategic Short Selling
Rather than expecting to profit from short selling, we use short positions to provide up to 100% additional capital for our long positions.
Risk-Adjusted Market Allocation
We seek to protect capital and increase returns by adjusting market allocation from 90% long to 30% short using valuations and market internals.
Tax Aware Execution
We seek to reduce the typical tax burden of hedge fund strategies by combining our long-short strategy with tax-aware implementation.
Private Equity Experience
Our core investment principles of value, quality, momentum, and low risk were developed over 25 years of private equity investing.
Cash Flow Projections
We systematically model 12-year cash flow projections for all 2,500 companies in our universe, providing a unique perspective on expected future returns.
Strategic Short Selling
Rather than expecting to profit from short selling, we use short positions to provide up to 100% additional capital for our long positions.
Risk-Adjusted Market Allocation
We seek to protect capital and increase returns by adjusting market allocation from 90% long to 30% short using valuations and market internals.
Tax Aware Execution
We seek to reduce the typical tax burden of hedge fund strategies by combining our long-short strategy with tax-aware implementation.