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The portfolio management process at Essex combines bottom-up stock selection with top-down secular trend analysis. The bottom-up process begins with Essex's team of industry-expert research analysts. The team is charged with identifying companies with high quality, sustainable growth at attractive valuations. Each analyst focuses on understanding the long-term growth of his or her respective industry, and the specific outlook of each stock within that industry in terms of sustainable revenue growth, margin trends, and return trends.
Ideal Investment
The ideal investment exhibits many of the following traits:
- Dynamic Growth Companies
- New/emerging products or services
- Powerful agent of change
- Rapid and/or accelerating growth
- Improving financial returns
- Sustainable Growth Companies
- Sustainable competitive advantage
- Consistent financial performance
- Attractive financial returns
- Strong market position
- Portfolio managers make all buy and sell decisions
- Maintain the highest conviction portfolio of 40-60 stocks
- Portfolio sector weights may vary significantly from the benchmark (up to 15 percentage points overweight)
- Maximum stock weighting of 5%
- Manage risk by understanding portfolio level exposures to external variables and monitoring individual company-specific fundamentals.
Sell Discipline
Essex portfolio managers execute all buy and sell decisions. A stock will be sold when:
- Investment thesis has played out and stock is no longer undervalued
- Anticipation of investment thesis failure
- Better relative investment opportunity
- Loss of confidence in management
Investment Process Chart
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