Our investment process encompasses three key steps:
1) identifying screening prospects, 2) determining our own estimate of intrinsic value for the business using the industry's valuation metrics 3) buying the business only if there is sufficient double digit discount of price to intrinsic value.
Screening: The investment process begins by narrowing our investment universe by screening for stocks with a market cap greater than $1 billion; pricing at or near the stock’s 52-week low, and attractive valuation metrics. The objective is to identify a pool of equities with attractive characteristics to focus our fundamental research on the most compelling candidates with the high probability of success.
Valuation: The next step in the investment process is to conduct fundamental research on selected companies to assess the attractiveness of an individual company from a business owner perspective. Fundamental research occupies the bulk of our effort and drives final security selection. The fundamental investigation process begins with an evaluation of company financials, competitive position, management, cash flow, and historic trends. The company’s fair intrinsic value is then determined through the application of several valuation methodologies and industry metrics that include discounted cash flow analysis, sum-of-the-parts analysis, return on capital analysis, and multiples analysis.
Purchase: If the firm’s research shows that a company can be purchased at a sufficient price discount to our calculated fair intrinsic value and offers clear catalysts for appreciation, its stock is considered for purchase by MVP's investment team which meets weekly to review portfolios and evaluate new investment candidates. After rigorous debate and exchange of ideas, the investment team sets final buy and sell targets for a company under consideration and makes the purchase if deemed appropriate.
Consistent with MVP’s investment process, the company employs a bottom-up sell discipline that includes selling when a stock reaches its estimated intrinsic value, or all catalysts are realized, or the company violates its investment thesis, or if a stock is superseded by an opportunity that offers greater return potential. MVP’s value investment process described above is applied across all three of MVP’s value investment strategies.
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