Investment Process

Appraise Companies and their Business

  • The investment process at Hartwell begins with a “bottom up” approach examining the fundamentals of individual companies and their industries.  Bottom-up analysis include dissecting financials, management dialogue, on-site meetings, industry cross references, and interacting with sell-side and industry analysts, among others. We seek those companies that exhibit unit volume growth and the ability to maintain pricing power.
  • We focus on the critical variables that are most likely to influence a company’s success or failure.  This process requires an intensive, highly refined analytical effort using multiple sources.
  • Our research efforts are focused on premier growth companies that are leaders in their industries. 

Identify the Catalysts

  • We identify, at an early stage, those catalysts which will be material to a company’s growth.
  • Positive catalysts for one company will likely lead to look-alikes, competitors, or suppliers that exhibit similar characteristics.
  • Successful growth stock investing requires the ability to anticipate future growth.
    We focus on accurately identifying future earnings potential of superior growth companies.

Typical Catalysts Include

  • New products
  • Technological innovations
  • Expansion into new markets
  • Regulatory change
  • Management changes

Portfolio Construction

  • We meet daily to discuss companies and portfolios
  • Initial positions are 2% to 4% of the portfolio.  Larger weighted positions are achieved through performance.
  • Sector allocation is a byproduct of our stock selection; as industries evolve and change over time so do our holdings.  We do not mimic or manage to index weightings.

Monitor the Portfolios and Control Risk

  • We constantly monitor our portfolio companies and their industries to make certain they retain the characteristics that led to their selection in the first place.
  • We recognize that a selling discipline is equally as important as an effective buying discipline.
  • Fundamentals dictate valuation.  We do not set predetermined price targets.
  • When the reasons for which we purchased the stock are no longer valid, we sell.