Fraser

investment process

Buy Guidelines: We utilize a blend of macro-economic analysis and traditional fundamental analysis to identify the companies that will most benefit from structural changes shaping the economy and financial markets. We are high-conviction managers who strive to build a concentrated portfolio of companies with stock prices that do not yet reflect their potential. Fraser is a boutique firm, and offers a definable, repeatable, and scalable process to produce superior results.

At Fraser Management we take an optimistic view of the world in which we first identify major themes that will positively impact the securities that participate in these trends. We look for trends that are misunderstood or under-appreciated as areas in which we explore buying opportunities. Conversely, we are skeptical of trends that the majority favors. Some of the themes we are currently participating in are the effect of long-term climate change, water scarcity, consolidation within the financial services industry, and the impact of growing Hispanic migration on U. S. commerce. After we have identified our areas of focus, we apply exhaustive research and due diligence to select specific securities that are best positioned to capitalize on these themes, and represent a “pure play” on our themes.

Portfolio construction begins with each theme being assigned a portfolio weighting of between 10% and 30%. Within each theme, we then select 4 to 6 stocks with an initial allocation of 2% to 6% of the portfolio.

Sell Guidelines: While selecting superior investments is paramount, we also have a strict sell discipline. As contrarians, we find it imperative to have solid risk controls in place not only to protect our investments on the downside, but also to realize their upside. We have identified several “trigger” events that compel us to review a position in order to minimize the potential negative impact of human emotion. Measures such as a 20% price decline, an inability to reach the required rate of return within two years, a price appreciation equal to 100% of the original cost, a position representing 10% or more of the portfolio, or a decline in valuation measurements trigger our sale process.

Portfolio Characteristics

- Contains 30 to 35 stocks
- Median market capitalization of $2 billion
- Low turnover (historically 25% annual)
- Stocks with lower valuation than the market
- Sector concentration

PO Box 1777, Burlington, Vermont 05402 - 802.658.0322