How We Invest
Process Discipline Leading to High Conviction Portfolios
We believe that concentrated portfolios of carefully selected growth companies that demonstrate predictable revenue and earnings growth and that are attractively valued hold potential for long-term outperformance of broad market indexes.
Building on this belief all DSM investment strategies are idea driven and built from the bottom-up. Our portfolio management and research team is solely focused on finding companies that offer the right mix of growth, quality, and valuation. Finding this combination of attributes is what enables us to invest on behalf of our clients in concentrated, high conviction portfolios with an intermediate to long-term investment horizon.
Our portfolio management and research team combines intensive fundamental research with a rigorous valuation methodology that we believe helps to reduce risk and enhance long-term returns. We search for growing businesses with solid business fundamentals, intelligent management and a history of attractive returns. Typically, these businesses will have projected revenue and earnings growth of at least 10% annually and will have demonstrated higher returns on equity and assets than the average business. In addition, and at least as importantly, we look for financial returns that are stable or rising, driven by improving business fundamentals.
We conduct a thorough security analysis of each company we consider for investment. Through our proprietary research approach, we project growth rates, earnings estimates, and valuation targets for each potential investment. We analyze a company’s competitors and its industry to gauge the sustainability of its financial performance. We assess likely returns using projected earnings estimates and price-earnings ratio targets for each company over multiple-year periods and scenarios. We believe our focus on quality businesses with predictable earnings growth and our continuous monitoring helps reduce economic, financial and earnings risk.
Our research and stock selection process is designed to be flexible and opportunistic to meet the challenges of an investment environment characterized by rapid change and frequent surprises.