Greystone’s core U.S. equity philosophy is growth-oriented. We believe that companies with superior long-term earnings growth produce superior long-term stock performance. Our strategy is to buy companies with sustainable long-term earnings growth, combining selections to provide proper diversification that reduces volatility and risk.
Our rigorous review process uses database screens and quantitative models that focus on earnings surprise, earnings momentum and valuation.
Quantitative screening narrows a 2,000 company universe to a smaller list of companies that meet carefully defined selection criteria and now can be assessed qualitatively to identify those worthy of careful consideration. Our professionals use a proprietary ranking system based on earnings-per-share growth, earnings surprise, price and earnings momentum and relative price-earnings ratios as primary screening criteria. Preliminary screening offers an absolute ranking of stocks in the universe.
Once a stock has been singled out, our team members give it personal attention to assess its sustainable growth characteristics. We look at the quality and record of management, business model, industry outlook, market share, profitability record, capital requirements and return on capital among other factors.
Once a stock passes our team’s scrutiny, we apply what-if modeling. This examines the stock’s and its sector’s contribution to overall portfolio return. In this manner, the team creates a portfolio with a sector and security mix that offers optimal return while being simultaneously conscious of overall risk.
U.S. 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. Databases include CPMS, Barra, First Call, Star Data, Ned Davis Research and Bloomberg Financial Markets. The ideas, however, are all internally generated, as are the conclusions.
In our team-based approach, the entire team considers a member’s recommendation to add or remove a security from the portfolio. Once accepted, we continuously monitor a stock for changes in performance outlook. This means tracking the latest valuations, sales, cash flow, earnings surprises, etc.
When a stock displays characteristics no longer consistent with our style, it’s sold and replaced with a higher-ranking stock. Sell decisions are based on changes in the fundamental or qualitative reasons for the original purchase, negative changes in earnings/valuation, and changes in management, ownership, market share, products or liabilities of the candidate.
We invest in common stocks, preferred stocks and securities convertible into common stock. Investments are spread among different industries and companies, and adjusts its portfolio securities based on long term investment considerations as opposed to short term trading. A portfolio typically holds securities of about 45 companies.