Investment Process

Greenwood Gearhart believes optimal investment management resides at the intersection of sound Economic Analysis, Security Analysis, and Portfolio Management.

Our time-tested approach considers each factor as part of the investment process. The resulting portfolios are built to stand the test of time.

WHAT WE LOOK FOR IN AN INVESTMENT
Attractive Valuation

Fair to undervalued companies based on normalized earnings or asset values.

Well Financed

Strong balance sheet with ready access to the capital markets.

Shareholder Friendly

Long-term track record of acting in the best interests of – and returning capital to – shareholders.

Competitively Advantaged

Possess competitive advantages – or “moat” – that are difficult to replicate.

Favorable Industries

Operate in industries with favorable cyclical or structural characteristics, barriers to entry, and/or exposure to demographic
mega-trends.

Capital Allocation

Deliberate management focus on optimizing capital allocation.

HOW WE SOURCE INVESTMENTS
  • 1. Search Strategy
    • Economic Analysis
    • Financial Screens
    • Industry Publications
    • Conferences
    • SEC Filings
    • Current Events
    • Value-based Research Sources
    • ~5,000+ PUBLICLY TRADED COMPANIES
    • 200-300 Watch List

  • 2. Security Analysis
    • Financial Reports
    • Risk Assessment
    • Industry Analysis
    • Barriers to Entry & Competitive Advantages
    • SEC Filings
    • Company Ownership
    • Valuation
    • 100 CLOSELY FOLLOWED

  • 3. Investment Discussion
    • Qualitative Factors
    • Quantitative Factors
    • Risk / Return Tradeoff
    • 4-6 NEW BUYS / SELLS ANNUALLY (20% T/O)

  • 4. Purchase, Monitor or Reject
    • 40-60 COMPANIES MAKE IT INTO PORTFOLIOS

Investment & Risk
  • Investment is placing capital at risk with the expectation of a gain, but the possibility of a loss.
  • Risk is the uncertainty of the outcome & measures the probability that the outcome is a loss, rather than a gain.
  • Because risk & return are positively correlated, the Investment Advisor’s responsibility is to assume risk intelligently on behalf of the client.
  • Investment Advisors mitigate risk through research to increase the knowledge of specific investments and through diversification to spread risk among investment opportunities.

For more information on Greenwood Gearhart’s View on Risk, please read this Whitepaper.