Internal Managers Stock Selection Methodology


The CI approach to stock selection is primarily "bottom up" in nature. Our method is to thoroughly investigate the dynamics of the companies we invest in and then identify a specific reason for investing in the securities of that company.

  • We attempt to control investment risk by investing only in those companies we have personally researched.
  • We attempt to leverage our knowledge by investing when expectations for the markets or our prospective investments are low.
  • We are price sensitive, meaning we purchase stocks when they are trading at what we believe to be a significant discount to the company's underlying value.

Internal Research

Capital Ideas makes equity investments in our client portfolios only after we have fully reviewed internally generated research conducted by the CI management team and research staff.

External Research

CI executes trades through several brokerage firms. As a result, we have access to various sources of brokerage investment research and information. We also make use of third-party research purchased by or provided to us. Some of this research is a starting point for CI's internal research effort.

Screening Databases

Our portfolio managers begin with the 7,000+ stocks traded on the NYSE, AMEX, and NASDAQ. A sophisticated set of "screening processes" is used to help identify those stocks that meet our criteria and warrant further research.

A Bottom-Up Approach

CI's portfolio managers carefully examine each of the companies which pass our tests. The emphasis is on "bottom-up" stock selection. Specifically, we look for the existence of a specific catalyst that we believe will result in a higher market price for the company's securities over the next two years.

Final Selection

CI's management team discusses all stocks considered suitable for investment. When a consensus is reached, various models are used to determine buy and sell targets. Each stock is then evaluated for suitability and return potential before inclusion into a client portfolio.

External Managers Stock Selection Methodology

Proprietary to the money manager selected