Six Step Process

The SCM Research & Investment Management Team utilizes a holistic, repeatable, flexible and proven six step investment process to build and manage client portfolios. This internally developed process is the foundation of our goal to attain above benchmark returns with below market risks for our clients over full market cycles.

Step One

Macro Economic and Market Analysis

Practical top-down forward-looking macro views of long-term economic, business and demographic cycles data and short-term economic data to identify risks and opportunities in order to steer the ship in the right direction

Step Two

Initial Stock Idea Generation

Cull entire publicly traded stock universe for initial ideas using macro ideas, proprietary quantitative screens, and opportunistic circumstances

Step Three

Preliminary Stock Valuation

Examine initial stock ideas using standard analyst’s spreadsheets (e.g., revenue and margin trends) and quality of business factors (e.g., barriers to entry) to identify potentially attractive stocks

Step Four

Exhaustive Fundamental Stock Analysis

Exhaustive, critical fundamental analysis of remaining stocks: detailed analysis of SEC filings, conference call transcripts, management’s business plan, etc., to identify both opportunities and potential problems (red flags)

Step Five

Portfolio Construction and Risk Control

Build economic-risk diversified portfolio, going beyond traditional sector diversification to reduce coincident economic drivers

Step Six

Portfolio Oversight and Sell Decision

Other side of risk-reward analysis – monitor and sell stocks at appropriate time and valuation, based on macro and fundamental analysis of evolving market environments

Result

Repeatable FLEXIBLE investment process with the potential to generate consistent long-term capital protection and net alpha IN CHANGING MARKETS.

Alpha – Alpha measures the difference between a portfolio’s actual returns and what it might be expected to deliver based on its level of risk. Theoretically, higher risk should equate to higher return. A positive alpha means the fund has beaten expectations. A negative alpha means that the fund has failed to match performance given its level of risk.