Chief Financial Officer
Reasons For Our Success
- WE ARE TOTALLY FOCUSED on a well-defined stock universe and we know these stocks better than any other investment management firm.
- WE CAN MOVE QUICKLY TO EXPLOIT TEMPORARY MARKET MIS-VALUATIONS, since we have already done the detailed fundamental valuations of many of these stocks. For example, the market often initially overreacts to surprising good or bad news about a company.
- OUR PORTFOLIO MANAGER first began analyzing Texas stocks in 1976. He has worked for many years with the same universe of stocks.
- OVER MANY YEARS, we have revised and fine-tuned our proprietary computer investment database and stock selection criteria.
- We use time-tested CONSERVATIVE VALUATION MEASURES such as low price-to earnings (PE), low price-to-book value, stocks selling at the lower end of their one, three, five-year price ranges.
- Quantitative measures are just the beginning of our analysis. Stock selection is based on IN-DEPTH FUNDAMENTAL RESEARCH, often done over several months.
- We AVOID HIGH-PRICED, “high growth” companies in which investors are betting on long-term high growth.
- WE DO NOT USE stock price “MOMENTUM INVESTING” OR STOCK-PATTERN CHARTING, known as “technical analysis”.
- WE DO NOT TRADE IN AND OUT OF STOCKS ON A FREQUENT BASIS. Our average holding period for a stock is about two years.
- Continuation of OUTSTANDING LONG-TERM CAPITAL GAINS
- MINIMIZE RISK by using a proven CONSERVATIVE VALUE investment approach
- Use of DIVERSIFICATION among industries
Stock ideas are identified by two primary methods:
- Continuous review, monitoring and analysis of Texas-based and select U.S. corporations and their stocks.
- Proprietary computer database.
Stocks eliminated from consideration:
- Unclear accounting statements
- Unsustainable or hard-to-predict growth rates
- Unethical management
- Poor competitive position
Key Stock Selection Criteria:
- Low price / sustainable earnings.
- Low price / sustainable cash flow.
- Low price / adjusted book value.
- Low price / five-year growth rate.
- Stock price at lower end of one, three, five-year ranges.
- Potential catalysts to unleash value (potential acquisition target, stock buyback, corporate restructuring).
- Management strategies that are clearly committed to enhancing shareholder value in the near term.
- Companies whose stock prices have declined sharply because of near-term problems, but which have a good long-term outlook.
- Management that is buying – as opposed to selling – their company stock.
- Price objectives are achieved
- Fundamentals change
- More attractive alternatives are found