We follow a five step investment process, outlined below.
Step 1: Idea Generation
We utilise a quantitative screening tool combined with an intensive company meeting program (over 500 meetings annually) to determine a list of stocks for more in-depth analysis.
Step 2: Industry & Company Research
Before deep-diving into companies, we conduct industry analysis taking into consideration industry structure, industry economics and profitability.
As part of the qualitative assessment of a company and our principle-based investing and stock selection process, we employ the ‘9 Commandments’ which are lessons learned through our long history of investing in smaller companies.
We ascertain the company’s sustainable cash generation capacity, returns and growth potential at mid-cycle by forecasting future free cash flow.
Step 3: Eiger Valuation System
The proprietary alpha score is used to determine a price/value ranking for each company. All companies pass through the same valuation and review process to ensure quality and consistency of analysis.
Step 4: Portfolio Construction
Construction of the portfolio is based on the alpha price/value ranking. A set of guidelines governs the maximum positions and risks that the model portfolio can take. The objective of the portfolio construction process is to build a portfolio biased towards undervalued quality franchise securities that will achieve the specified performance objective within the defined risk constraints.
Step 5: Risk Management
Risk management is inherent in the investment process. We use proprietary risk models to determine the overall risk of the portfolio and the components that make up the total risk. All decisions follow the same process and must be authorised in the same way.