Our process is based on old-fashion, rigorous, bottom-up fundamental analysis. Our multifaceted valuation methodology identifies companies trading below True Value by using the appropriate valuation metric specific to that industry.
Estimate of True Value
Rockwood Investment Counsel thoroughly analyzes a company to determine its true worth or True Value.
When considering an investment, we evaluate the business as if we were a private investor buying the whole firm. We analyze much more than just a balance sheet, income statement and cash flow. We look at the fundamentals of the company, the environment in which it competes and the potential it has to thrive over the next several years.
Most important to our analysis, we assess the worth of a company’s cash flow opportunities – does management have the opportunities and interest in reinvesting the cash into faster growth or higher margin segments of their business?
The result of this analysis leads us to a fair, long-term Value. We can then compare the company’s value to its stock price and determine if it represents an adequate margin of safety given the company’s business risks.
• High Quality Businesses
• High annual growth of cash from Operations
• Financially Strong
• Experienced Management
• Sound Business Fundamentals
• Sustainable Competitive Advantage
Each investment is purchased on its own merits and has an identifiable catalyst which will change the way Wall Street views the investment’s prospects for success. A catalyst can be any number of events: a new product, a higher earnings growth rate above expectations, higher operating margins, a share buyback, higher divided payout ratio, new management, an accretive acquisition or an improved balance sheet among many others.