Farnam investment philosophy adopts an active high-conviction approach combined with a bottom-up growth investment process. The Farnam team applies growth, quality, and valuation tests to companies while positioning their investment style towards quality businesses that display sound growth opportunities.
Farnam focusses on two main factors in order to evaluate stock selection criteria:
A quantitative screen to source ideas and looks specifically at factors such as relative price/earnings, cash conversion, free cash flow and price earnings to growth (PEG) ratio.
Growth factors are introduced into the analysis in order to further qualify the stock selection with consideration given to earnings per share, return on equity (ROE), growth targets (greater than 10%) and price momentum in order to derive a ranked universe of companies to consider for inclusion in a portfolio.
From here, highest ranked companies are then subject to detailed fundamental analysis in order to identify and confirm the growth criteria necessary to consider inclusion in the portfolio.
We believe by running concentrated, high conviction portfolios that we can be nimble and entrepreneurial in our investment strategy. We don’t follow an index or benchmark however consider sector and company risk in constructing portfolios.