Fairview Investment Research Process

At the top of the loop is the first step in the research process: idea generation. To find new investment ideas, we employ several methodologies:

(1) We utilize quantitative screening tools designed to identify what we believe are high-quality companies trading at inexpensive valuations.

(2) We generate ideas by reviewing independent research, investment newsletters, trade publications, company annual reports, and by actively communicating with our network of industry colleagues.

(3) We review SEC filings to analyze portfolio actions taken by industry colleagues that we respect.

(4) We review recommendations provided by third-party research providers.

(5) We monitor companies previously researched by the Fairview investment team to identify any that have declined in price to a level suitable for investment.

Once a company generates interest, Fairview’s research team leads the next step of our process: a review of the investment’s key risks and merits. We utilize a checklist of questions that help us identify the company’s competitive advantages, management quality, financial characteristics, valuation and risks.

We apply a multi-stage due diligence process designed to maximize our level of understanding of the subject company in the most efficient means possible. Each stage serves as a “pass” or “no pass” checkpoint along our path toward reaching an investment conclusion, with the depth of our research increasing along each stage.

In the final stage of the analysis, we complete a research report designed to provide a comprehensive evaluation of the subject company.

The research team makes the final determination about whether to include the security in the portfolio or place it on our “watch list” for possible future consideration. The decision to initiate a portfolio investment is contingent upon a variety of factors, most important of which is whether or not the security is deemed superior, from both a qualitative and quantitative perspective, to an existing portfolio holding. A new security deemed superior to an existing holding will be added to the portfolio in place of the existing one, unless tax considerations dictate otherwise.

Stock position sizes vary based on several factors. These factors include, but are not limited to: the quality of the business, our conviction in the investment idea, and the level of its undervaluation.

Once a security is part our equity portfolio, it is carefully monitored by a member of Fairview’s investment team. Our analysts perform a thorough review of quarterly business results and the research team discusses important company news and relevant industry developments that may impact our assessment of the company.

We add to stock positions when new information increases our conviction in our original idea, or when a stock price declines and our investment thesis remains intact. We reduce our position when it constitutes an overly large portion of the portfolio, or when the stock becomes materially overvalued. We sell a company’s stock when new information suggests our investment thesis was incorrect, or when a superior opportunity is identified that would improve the risk-reward profile of our portfolio.