I. Investment Idea Generation
Two primary sources:
1. The use of a proprietary screening process to identify undervalued securities based on price to normalized earnings power
2. As part of our normal due diligence process as outlined in step 2. Specifically, this second source of idea generation includes companies that are identified through meetings and the research and analysis done on companies within industry food chains
II. Fundamental Company & Industry Analysis
This process begins with the long-term historical analysis of fundamental performance drivers. Altrinsic's analysts then evaluate management capabilities, strategy, and execution, and they forecast pro forma cash flows, using normalized profitability measures. Additionally, the analysts identify, analyze, engage on, and assess the impact of material ESG risks and opportunities in the holistic assessment of company fundamentals. Intrinsic value is determined through the application of multiple valuation measures.
III. Portfolio Management
Altrinsic's portfolio managers build a portfolio on the basis of valuation and risk-adjusted return profile on a bottom-up, stock-by-stock basis. Region, industry, and market capitalization exposures are residuals of this company-specific approach, as evaluated by the Altrinsic investment team.
IV. Risk Management
Risk management is embedded throughout the process at both the stock and portfolio levels by:
- focusing on liquid, quality businesses with managements that recognize minority shareholder rights
- fundamental security-level return, accounting, and risk analysis with an emphasis on cash flow and balance sheet as well as earnings quality analysis
- portfolio risk analytics, which include both proprietary and third-party risk tools
- the consideration of ESG factors which is addressed at the company-specific level in the course of our analysts' fundamental due diligence