Research is the heart of W.P. Stewart and the foundation of our bottom-up investment approach.
High conviction through research
Our research is focused on a small number of companies, with one of the highest analyst-to-company ratios in the asset management industry. At any given time the universe for our US portfolios is typically about 40 companies. We identify the universe companies through the collective judgment and experience of our global investment team.
We develop an in-depth understanding of the universe companies from a variety of internal and external sources. This includes visiting these companies regularly; contacting managements frequently; cross referencing with competitors, customers and suppliers; and consulting with independent industry experts. We interrogate a company’s business model to understand the dynamics of a company’s long-term prospective earnings stream and the ability to finance and execute its future growth plans. Our experienced analysts apply their judgement from the perspective of a business owner. This degree of understanding is only achieved through extremely thorough research and extensive field work. It enables us to build detailed five-year financial projections, which often take into consideration research efforts that go beyond merely reviewing reported public detail.
First class companies
Our intense research is focused on identifying high quality companies with strong fundamentals and long-term earnings growth potential -- companies with enduring competitive advantages, sustainable franchises, proven management teams and strong business models.
Very few companies ultimately meet our criteria, the most important factors being:
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solid and consistent earnings growth, normally associated with significant revenue growth;
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above average profitability with low sensitivity to economic cycles;
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a strong financial position with below average debt to total capital ratios, controllable operational leverage and high free cash flow; and
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a talented management team.
We apply the widest perspective to assessing a company’s potential using the knowledge of our investment professionals based in our offices and affiliates around the world.