The SCA Process

We believe in a bottom-up investment process. We don’t target specific sectors or geographies. Instead, we scour the globe for undiscovered companies with strong fundamentals with high growth potential.

Screening:

• The SCA screen is 100% proprietary and unique to our firm.

• It is a tool that was internally developed with the intention of quantitatively reflecting our investment philosophy.

• The main components include:

  • ROA (the largest weight)

  • Sustainable growth from a sales, earnings, and cashflow perspective

  • Steady to increasing margin profile

• We screen ~65,000 companies per year across industries and regions.

Company Due Diligence:

• Direct meetings/calls with company management to assess:

  • Competitive advantages

  • Overall market opportunity

  • Management philosophy and ownership

• We model our assumptions to formulate a forward-looking financial picture.

• Valuation considerations allow for a degree of downside protection if the company’s growth underperforms.

• We talk to over 200 unique companies annually.

Portfolio Construction:

• Bottom-up, idiosyncratic approach with each position standing on its own merit.

  • 50-70 holdings

  • Maximum sector weight 40%

  • Maximum country weight 40%

Risk Management:

• We embrace company-specific risk, as our entire focus is trying to identify and understand risk and reward metrics for the companies we own.

• Ongoing scenario analysis

  • Systematic communication with management

  • Automatic tracking of monthly, quarterly, and annual updates vs. our   assumptions

  • Quantitative reviews of company metrics within the context of the portfolio

  • Periodic team reviews

• Macro risk: unlike stock-specific risk, we try to avoid excessive macro and geopolitical risk by avoiding countries where those risks can overwhelm the bottom-up company dynamics.

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