Process

What We Look For:

  • Balance Sheet Strength
  • Durable, Predictable Business Models
  • Low Investor Recognition and Low Expectations
  • Under the Radar Themes
  • Strong, Shareholder Friendly Management Teams

How We Invest:

Dynamically Screen for Ideas
Opportunistically narrow the small cap universe ($250mm – $2bn market cap) to build a short list of companies that deserve further research. We focus on finding high quality enterprises that are out of favor, misunderstood and under-researched.

Assemble the Research Mosaic
Combine information from a variety of sources (filings, archived conference calls, trade journals, etc.) to construct a detailed understanding of the business.  We look for unrecognized themes and catalysts that, as they play out over time, have the potential to capture the imagination of other investors.

Interview Management & Competitors
Determine the company’s goals, strategic focus, and competitive positioning.  Learn management’s communication style and operating philosophy.

Portfolio Construction
The purchase decision takes into consideration the current valuation, level of conviction, perceived urgency of the opportunity, liquidity and overall portfolio diversification benefits.

Ongoing Evaluation
Track the financial and operational progress of portfolio companies.  Monitor valuations and gauge the sentiment and expectations of other shareholders and sell side analysts to gauge the maturity of the investment.

Sell Decision
We prefer to exit investments after a portfolio company has become over-recognized and begins trading at more demanding valuations.  We pay careful consideration to our original assumptions and sell if we lose confidence in our thesis, the management team or business model.