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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 to100% 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
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