Our organic process does not seek to narrow the universe by employing quantitative “screens”, typically referred to as a “funnel” in our industry. In our estimation, “funnel logic” has significant limitations. Rather, Validus’ method utilizes an iterative process to uncover key characteristics of individual portfolio candidates that, in our experience, have meaningful informational value.
Growth Opportunities Identified through Iterative Process using Five Pillars of Active Industry-Based Research
- Evaluation of each pillar results in S.C.O.R.E. proprietary ranking (Systematic Customized Opportunity and Risk Evaluation)
- Ongoing review, reconfirmation of investment thesis
Validus’ sell discipline seeks to identify fundamental breakdowns before they are reflected in a company’s stock price. This requires us to be pro-active in identifying material changes in the growth thesis, financial strength or knowledgeable investor commitment on a company-by-company basis. It also requires the conviction to take action, even if the market in general or Wall Street disagrees in the short run. It’s worth noting that some information reflects transient issues that do not impede the growth thesis over our investment horizon – not every signal translates into a sale.
At every stage of our process, Validus seeks to identify, understand and control risk, both at a stock-specific and portfolio level.
We build “best ideas” portfolios through implementation of market risk mitigation, risk budgeting, portfolio guidelines and an entry / exit overlay.