“Scholtz & Company has geared its investment process toward generating alpha while taking on an appropriate level of risk.”
Consultants / Institutions
Scholtz & Company has geared its investment process toward generating alpha while taking on an appropriate level of risk. To achieve this goal, Scholtz & Company employs a variety of methods and techniques which have been utilized by our Portfolio Managers throughout their careers. Below we’ve laid out our basic investment objectives, equity characteristics, and sell discipline used to create our portfolios in simple bullet form.
Portfolio Objectives
- Preservation of Capital
- Portfolio volatility less than the S&P 500 (or appropriate benchmark)
- Above market growth potential
- Above market current yield
Stock Portfolio Characteristics
- Companies that have a superior offering and are thus taking market share
- Companies in secular growth industries
- Companies with strong franchises that have high competitive barriers to entry
- Companies with excellent financial metrics (margins, cash flow conversion, ROIC, strong balance sheet)
- Companies with a good management team that displays good vision, acts ethically, and treats shareholders well
- Good relative values: low P/E, low price to free cash flow, low price to book, high ROIC, and high dividend yield
Sell Discipline
FUNDAMENTAL SHIFT
- A thesis altering change in corporate or industry fundamentals that drastically affects the present value of the business model
- Unethical conduct or suspicion of fraud
- Credit quality deterioration of fixed income investments
TACTICAL
- Current price greatly exceeds our estimate of intrinsic value
- Relative stock strength becomes highly negative