Equity Review Discipline

Buy/Hold Signals

By the end of each quarter, our weekly equity review process has evaluated each stock holding and identified new opportunities. Then we start again…

• P/E and P/CF lower than historical average
• Strong and growing free cash flow
• Positive revenue and earnings growth
• Realistic earnings growth estimates
• Reasonable PEG ration
• History of positive EPS surprises
• Upward revisions in EPS estimates
• Competitive profit margins
• Increasing ROE
• Decreasing leverage
• Attractive dividend yield
• History of dividend growth
• Low divided payout ratio
• Insider buying
• Positive industry or company developments
• Positive technical and price momentum

Sell Signals

• P/E and P/CF greater than historical average
• Decreasing or negative free cash flow
• High PEG ratio
• Declining growth in revenues and earnings
• Decreasing ROE
• Increasing leverage
• Multiple negative earnings surprises
• Downward revisions in earnings estimates
• Lack of positive price momentum
• Increasingly competitive market environment
• Negative industry or company developments

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Portfolio Management Process
Investment Style
Equity Review Discipline