Lee, Danner & Bass, Inc. utilizes mid and large capitalization equity securities that possess characteristics of growth. However, the valuation of the underlying securities in the marketplace and versus their peers is a critical component that governs the timing of security selection.
Overlaying our analysis of general economic trends, equity investment decisions are made through a complementary blend of top-down and bottom-up analysis.
Top-down analysis involves the application of trending techniques to identify key sectors and attractive industries and companies within those sectors.
A bottom-up analysis is also applied to identify individual companies that, due to unique characteristics or innovative performance, are likely to achieve superior earnings growth regardless of economic conditions. These are closely analyzed to incorporate the effect of any applicable external forces of change on performance.
SEVEN THINGS WE LOOK FOR
When analyzing prospective companies for investment, we look for:
- Earnings per share that show a likelihood to grow at above-average rates, and a purchase price that represents an attractive investment value
- An excellent management with a proven record of success
- A business that has an opportunity for growth through present, and perceived future, economic, political and social forces of change
- A premier industry position, likely achieved through superiority in manufacturing, marketing and/or technology
- A sound balance sheet with debt making up an acceptable percentage of total capital
- A demonstrated ability to achieve and maintain high profit margins and above-average returns on equity and total capital
- A high reinvestment rate and ability to finance future growth largely from internally generated capital