Our investment process is primarily driven by stock selection decisions taken after four key stages of analysis and evaluation:
All the stocks in our universe are grouped into "relative value"-based quartile rankings by our proprietary model. When ranking this universe, the model uses an historic mean-reversion analysis to identify opportunities. The mean-reversion concept suggests that the stocks trading at the largest discount relative to their historical averages would offer the greatest potential for outperformance, and hence the model ranks these stocks as the most attractive.
Stocks are put through the proprietary fundamental analysis by our locally based research professionals. Analysts evaluate a company's management potential, business plans, prospects, competition, and industry-related risk conditions. Company contacts add value to our research and help to expand upon analysts' initial findings. Each company is first compared to its industry constituents and then to other similarly ranked stocks according to the model ranking.
Based on the above, final decisions on stock ratings are then taken by the weekly Stock Selection Committee meetings. Our in-house analysts make proposals on whether to accept or change the quantitative model ranking based on the results of the fundamental research. Committee members discuss the proposals and the Chairman then decides final stock ratings. The output of the meeting is the stock selection recommendations list from which each portfolio management team will construct a portfolio.
Stock candidates for portfolio construction are selected from the updated stock recommendation list, according to the risk profile and investment guidelines of the particular client.