Investment Process

Thomas D’Auria, CFA has spent the past 35 years bringing clients his time-tested winning investment management approach. He has refined this approach since the early 1990s, managing mutual funds, institutional portfolios, and high-net-worth individual accounts at Merrill Lynch, HSBC, and Dumont and Blake before co-founding Tandem. His risk-aware approach to providing financial stability to a portfolio is described as follows:

We combine top-down macroeconomic analysis with bottom-up stock selection. We believe market inefficiencies exist at the macro level (such as a regional, national or global economy as a whole), the sector level (an industry or area of the economy) and the individual security level. Beginning with a global perspective, we look at global economies and determine how this will affect the national economy and economic sectors before moving to security selection. The term we use is “harvesting the business cycle.” We determine which sectors will likely outperform the market over the upcoming 12 to 18 months and which will underperform based on our economic view. Then we modify our sector weights to reflect that view.

The bottom-up approach begins with the stock universe of approximately 150 companies that we monitor. If we decide to overweight a specific economic sector, we look for the best names in that sector for investment. We perform five-factor research on securities being considered for purchase. We check for sufficient trading liquidity to allow us to get in and out without affecting the stock price. We then look at the industry position and competitive advantages. We study managerial and financial qualities. We determine the company’s prospects. Finally, we look at valuation. We invest in companies with varying growth expectations but insist on buying stocks with meaningful upside potential based on our analysis.

The over-arching philosophy for our client portfolios is to invest in growing businesses with strong management teams, disciplined balance sheet and cash flow statements, and strong income streams – ones which allow us to understand how the companies are deriving their growth and look forward on how management has a clear philosophy to grow the business going forward. We seek to invest in strong, growing companies selling at reasonable valuations.