Investment Strategy
SDM’s investment strategy seeks to achieve superior investment returns over the long term (typically 3 to 5 years) by applying a disciplined research process. The process focuses on understanding the underlying value of the business so that we may exploit profitable opportunities that occur when there are significant discrepancies between intrinsic value and market value.
Our primary focus is to invest in Mid-Cap companies, whose market capitalization is between $600 million to $15 billion. We look to identify well managed companies with identifiable and sustainable competitive advantages that will remain in place for the foreseeable future. We seek companies that are selling at a substantial discount to an appropriate identifiable and measurable benchmark of value. Other evaluation factors that we consider are: the existence of improved business fundamentals (e.g. improved earnings growth), a change in strategic direction or turnaround, or a change in capital structure that improves asset efficiency. SDM will also consider companies where short-term price weakness appears to be due to transitory events that obscure their positive long term fundamental prospects.
SDM believes that the “quality” of our thinking and our disciplined research practices are what separate us from other investment managers and should allow us to achieve superior returns in the Mid-Cap value space. We believe the Mid-Cap value segment of the market represents the best opportunity to achieve superior returns with an attractive risk-to-reward trade-off.