Investment Process

Greystone’s Canadian equity team is growth-oriented. Knowing a company’s stock reacts positively to growth in earnings and cash flow, we use quantitative and qualitative methods to manage a portfolio that focuses on growth. Our growth style is one of our distinguishing features — and has been since the firm’s inception.

Our process begins by screening more than 700 TSX-listed companies. Among the quantitative factors the Greystone team looks at are quarterly earnings-per-share momentum, earnings surprise and earnings revision. But this screening is only a first step. It highlights possible purchase or sale candidates. The rest of the work is hands-on.

In Greystone’s team-based approach, the entire team considers a recommendation to add (or remove) a security. Once accepted by the team, the stock is continuously monitored for changes in performance outlook. This means tracking the latest valuations, sales, cash flow, earnings surprises, management and so on. If a stock displays characteristics no longer consistent with the firm’s style, it is sold.

Decisions to divest can be prompted by changes in the fundamental or qualitative reasons for the original purchase (e.g. negative changes in market share earnings/valuation, management, ownership, products or liabilities) or a material drop in its overall ranking, presuming a more-attractive opportunity is present. Once a decision to sell is made, the entire position is sold as market conditions permit, resulting in very consistent returns across all portfolios.

Canadian equity team members have sector and generalist research responsibilities. They rely on external sources for analytical data and primary research, but know their companies qualitatively through contact with investment analysts, industry conferences, annual reports and management interviews.

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