Investment Philosophy
We are value investors. We believe that a company's stock price and its underlying economic value are often mismatched. As these discrepancies tend to be rationalized over time, volatile share prices typically regress toward their more stable intrinsic values. The focus of our stock selection process is the identification of those situations where the current price is materially below inherent worth, based on our analysis of the company’s financial strength, profitability and future earning power.
Process Overview
ICM is differentiated from other value managers by our initial focus on the underlying economic franchise. In seeking to produce higher-than-market returns, our approach combines the application of proprietary screening with intense fundamental analysis and an emphasis on valuation. We attempt to discover inflection points or changes in business momentum.
Screening Process:
- Identify companies that appear on the surface to be undervalued based on financial strength and profitability.
Traditional Fundamental Security and Valuation Analysis:
- Assess company's competitive position.
- Analyze company financial statements.
- Interview company management, customers and competitors.
- Review assessments of outside analysts and consultants.
- Attempt to determine an inflection point or change in business momentum.
Valuation Analysis:
- Project valuation using historic absolute and relative valuation ranges.
- Determine the fair value.
- Establish expectation points.
- Set price objectives.
Portfolio Construction:
- Small cap – 130 – 150 positions.
- Large cap – 30 – 40 positions.
Sell Discipline:
- Stocks are sold when they have become overvalued, fundamental changes occur, or more attractive alternates are identified.
