STAGE 1: Idea Generation
FIRSTHAND RESEARCH: It is the core of our investment process. On average, our research team holds over 100 on – and off-site management interviews per year. A combination of one-on-one management interviews and participation in international trade shows and conferences allows us to gain a truly global perspective and uncover opportunities for our clients’ investment portfolios.
QUANTITATIVE RESEARCH: Proprietary quantitative models are used to identify undervalued companies. Examples of factors used in this program are: Price-to-Book Value, Price-to-Cashflow, Price-to-Earnings Growth, Earnings Yield and Estimate Revisions.
OUT-OF-FAVOR STOCKS: Investor sentiment and emotion can have a large influence on stock prices over a short time period. This market dynamic may lead to situations where stocks trade significantly below their fundamental value resulting in potential investment opportunities.
STAGE 2: Deep Fundamental Research
Our investment discipline is centred on buying stocks trading at a discount to their intrinsic value (IV), where we believe a catalyst in the company or the market has the potential to increase the recognized value of the company and the price of its stock. (Intrinsic value is defined as a combination of Price-to-Earnings, Price-to-Earnings Growth, Price-to-Cashflow, Price-to-Book Value and Discounted Cashflow Analysis).
Our focus is on global companies with a market capitalization of at least $1 Billion. On average, 70 per cent of the equity portfolio will be allocated to Global Dividend Growth Stocks. Global Dividend Growth Stocks are companies that pay a dividend and have a track record of growing their dividend per share over the last five years.
STAGE 3: Portfolio Construction & Risk Management
Macro views on asset allocation are combined with bottom-up stock picking to develop a focused portfolio of 70-80 high-conviction equities.
We manage portfolio risk through:
- A proactive sell discipline and profit taking approach based on stock-specific valuations. In addition, selling if the investment thesis or catalyst for future investment returns turns unfavorable.
- A belief that at times cash is the best investment. We will vary portfolio cash levels accordingly.
- Selectively incorporating market alternative investments to reduce volatility and enhance returns.
If you are interested in learning more about our Equity Research Process, please contact
Russ MacKay at (403) 234-6103 or rmackay@mcleanpartners.com
Disclaimer: McLean & Partners provides independent research and advice to its clients on a fee for service basis. The company is not engaged in any investment banking, underwriting, consulting or financial services activities on behalf of any companies. McLean & Partners’ research reports are for the sole purpose of managing client portfolios on a managed and non-managed basis. The company may engage in proprietary trading to invest surplus corporate cash balances. The opinions expressed herein are those of the author and do not necessarily represent those of McLean & Partners Wealth Management Ltd. The information contained in this report has been obtained from sources believed to be reliable, however, we cannot represent that it is accurate or complete. McLean & Partners Wealth Management Ltd. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.
