Hedged Value

Investment Philosophy & Process

PHILOSOPHY

H&W employs a research-driven, fundamental value investing approach.  Mispriced long and short opportunities often emerge because the market extrapolates current trends into the future, which leads to favoring popular investments and shunning others regardless of valuation.  Empirical evidence suggests that companies generating above average returns on capital attract competition that leads to lower levels of profitability (potential short opportunities).  Conversely, capital leaves depressed areas, often allowing profitability to revert back to normal levels (potential long opportunities).  The difference between a company's price based on an extrapolation of current trends and a more likely reversion to mean creates the value investment opportunity.
 

PROCESS

To uncover these opportunities, we employ a disciplined, bottom-up investment process emphasizing rigorous, internally-generated fundamental research.
 

STAGE PURPOSE RESPONSIBILITY
1. Idea Generation Identify long/short candidates and prepare initial review Entire Team
2. In-Depth Evaluation Prepare detailed assessment of investment opportunity Analysts
3. Recommendation/Review Peer review, assess risk/return profile PMs/Sector Teams
4. Portfolio Construction     Buy, sell, monitor PMs