“The Four Cs is a common sense approach to equity research that leverages more than 25 years of investing experience.”
– Daren Heitman, CFA, Chief Investment Officer
Change
Turnaround Opportunities
We only establish positions in companies when we anticipate significant, positive fundamental change within three years. More specifically, we expect the company’s earnings to be materially and sustainably higher than the current level. Typical drivers of positive fundamental change are a cyclical upturn in an industry, a new product cycle or a company restructuring (often with new leadership).
We only establish positions in companies when we anticipate significant, positive fundamental change within three years. More specifically, we expect the company’s earnings to be materially and sustainably higher than the current level. Typical drivers of positive fundamental change are a cyclical upturn in an industry, a new product cycle or a company restructuring (often with new leadership).
Cheap
The stock of the company under consideration must be significantly undervalued relative to our estimate of “fair”, or intrinsic, value. A typical new position will possess appreciation potential of 50-100% at the time of purchase. We expect our price targets to be realized within three years.
Competitively Stable
We require the companies we purchase to have stable or growing shares of predictable and essential markets. We expect each of our companies to be larger, more valuable entities ten years from purchase. If it is unclear whether or not the company meets that criteria, we consider the investment speculative and outside our discipline.
Conservatively Financed
The companies we purchase have access to capital that comfortably exceeds their capital requirements, usually by a wide margin. Many of our current holdings have substantial cash and no or insignificant debt.