INVESTMENT PROCESS / PORTFOLIO CONSTRUCTION
Detailed Information On Green Investing At Winslow:
Investment selectivity has always been a part of Winslow's philosophy. Simply put, we feel that the best way to beat our benchmarks over the long-term is to thoroughly analyze portfolio candidates and to build and maintain significant positions in those select few which we feel have the strongest growth potential. This highly selective process results in concentrated portfolios, typically 40-50 positions at any given time.
Stock selection focuses on companies at points of inflection or with "game-changing" products or services that offer investors the potential for significant capital appreciation. We look for well-financed companies, led by experienced, high-quality management teams, with three-to-five year growth rates greater than 20% and with PEG and enterprise value (EV) to revenue ratios lower than their peer group.
For our small cap portfolios, we typically invest in companies ranging from $50 million to $2 billion in market capitalization. For our multi-cap portfolios, we will invest in any company that offers desired growth characteristics, but our selection process tends to emphasize mid-cap and small-cap stocks - portfolio holdings typically range from $1 billion to $10 billion in market capitalization.
Step One: Idea Generation
We draw on both internal and external sources to generate investment ideas. External sources include industry contacts, outside consultants, other asset managers, professional and industry associations and research from Wall Street firms. We view our investment universe broadly, and look for any company offering the potential for significant environmentally responsible growth and/or growth within green market sectors. From this broad universe, we maintain a list of approximately 300-350 as candidates for more in-depth research.
Step Two: Intensive Research
Once candidates are identified, we use an intensive research process that incorporates both fundamental, bottom-up research and a review of non-financial factors that may influence a company's performance (for more details see the "Environmental / Governance Research" and "Green Markets Expertise" pages in this section). Elements of our fundamental research include:
- on-site company visits to tour facilities and meet key employees
- review of publicly available materials and regulatory filings
- review of corporate governance policies and practices
- interviews with customers, suppliers and competitors
- outreach to industry experts
- continuous dialogue with company management
This activity seeks to identify companies with significant exposure to green markets and/or environmentally responsible profiles, and that exhibit the potential for rapid growth. We look for growth companies with the following characteristics:
- bold, new ideas
- expected near-term growth catalysts, such as new product launches or major market trends
- experienced, high quality management teams with defined strategies
- growth rates of at least 20% annually
- financial resources to achieve stated business objectives
- little or no debt
- favorable macrotrends
Step Three: Winslow Investment Committee Meeting
On a weekly basis, our investment teams meets to present and potentially approve new investment recommendations and to review current holdings.
Step Four: Portfolio Construction
Once an investment idea is approved, we set a target allocation for the new holding within our portfolios, taking into account stock liquidity and float and forecasted investment time horizon. Initial positions are established between 1-2% with the expectation to build positions to 3-5%.
Step Five: Sell Discipline
We constantly monitor the holdings in our portfolios to determine if there have been any significant changes in outlook since the purchase of those holdings. We may sell a stock if:
the stock has met or exceeded its price target,
the position has appreciated beyond 10% of the portfolio,
we perceive an alteration of the investment premise,
we have identified alternative investment ideas with greater perceived investment potential, or
client withdrawals or shareholder redemptions require the sale of securities in order to raise cash.
