Our Investment Approach
A stock is one of the few things we know of where the more expensive it gets, the more attractive it seems to be, to most investors. Our approach is to find quality investments for our clients when they are at a discount to their intrinsic value.
While it is impossible to predict future investment performance, it is possible to do analysis of stocks and bonds and real estate to sum up whether the business that is being purchased appears solid. With a well-researched estimate of value, one can buy at a discount to improve the opportunity for a positive outcome, and to minimize investment downside. This is the discipline we follow and the opportunity we seek for our clients - to purchase good businesses on sale.
There are times this discipline can produce a contrarian result: we tend to become cautious when others are more euphoric, and we sometimes find ourselves more interested in certain types of investments when the crowd has decided they are unattractive. Sticking to this discipline year in and year out is what gives us the highest possibility of achieving our clients' investment goals.
Our Investment Committee meets regularly and reviews investment models, fund information, analysis and performance, the macro economy and other matters. Feedback on the economy and on the market environment from our perspective compared to other research resources prompts and challenges our own investment thinking, so clients benefit from ongoing intelligent input from our team and outside resources that have philosophies aligned with ours.
Everything we do at PJS Investment Management is to enhance a client’s success as an investor, so that they can reach their financial goals.
We strive to attain the following criteria when making individual equity selections
- Strong corporate management and leading market positions for its products and services.
- Company has a strong financial position with adequate liquidity reserves.
- Company provides essential services or products, with recurring needs, whose demand persists even in slow-growth environments.
- Company operates in countries with favorable growth prospects and a stable political environment.
- Company operates in an industry that is well-positioned for long-term growth and benefits from world economic trends.
- Growth of company revenues is based on regular capital investment projects and research/development expenditures.
- Strong competitive position based on patents, trademarks, brand names, consumer franchise, market share, proprietary products, strong distribution system, effective advertising and marketing.
- High return-on-equity and strong profit-margins; which provide funding for both company growth and dividends.
- Attractive dividend yield and prospects for continued dividend growth.
- Attractive valuation based on price-to-earnings ratio, price-to-cash flow ratio, earnings growth rate and dividend growth rate.
We strive to reduce risk and volatility in our bond portfolios by using the following criteria.
- Issuer has strong finances, a good credit rating, and a stable outlook.
- Issuer is not likely to be a victim of adverse political or economic developments.
- Issue provides adequate return relative to inflation and to other available issues.
- After-tax return on issue is attractive relative to alternatives.
- Maturity of issue is consistent with limiting market risk from a rise in inflation and interest rates.