Investment Process (PSQGX)
Proprietary Quantitative Analysis & Screening
Start with Standard & Poor’s database of approximately10,000 company database and identify companies with the following criteria:
- Financially sound
- Owner earnings characteristics we view as attractive
- Historically consistent profitability and profit margins
- At least $1 of market value per $1 of retained earnings
Qualitative Analysis
Approximately 150-200 companies remain and are studied to identify potential sustainable competitive advantages
Portfolio Construction
The result is 50-100 candidates for PSQGX portfolio of 24-45 holdings. Initiation of a position is approached when prices are viewed as attractive.
The difference represents our assessment of the margin of safety between estimated intrinsic value and market price.
Sell Discipline
Business Risk
- Deteriorating fundamentals of the business
- Competitive developments or secular shift in economics of the business model or industry as a whole
- Acquisitions outside of company’s core competency that put margins at risk or defocus the company
- Regulatory changes or management changes
Valuation Risk
- Price appreciation that results in the market price exceeding the Adviser’s estimate of intrinsic value
- Secular shifts in economics, such as declining margins or increased competition, that may affect long‑term value
- Positions may be trimmed as they approach approximately 4%–6% of the total portfolio