EQUITY INVESTMENT PROCESS

MCM merges bottom-up quantitative screening with top-down global investment themes to search for portfolio candidates. Final portfolio selections are based on fundamental company reviews and a risk management overlay. Our U.S. growth, U.S. value, and International ADR products are concentrated all-cap portfolios that can be combined in any ratio.

Quantitative Screening
Our bottom-up quantitative screening process filters portfolio candidates from the universe of domestically traded (US) stocks. The screens focus on companies that meet the desirable fundamental metrics for each investment style exclusively, i.e. there is no overlap between styles. Stock selections are pure growth or pure value, not growth at a reasonable price (GARP). The screening process filters out most of the universe to leave between 50 and 100 portfolio candidates for each investment style.

Fundamental & Qualitative Analysis
Each of the portfolio candidates (for value, growth, and ADR) are analyzed in-house utilizing fundamental databases (see below) and outside research (from traditional sell side brokerage firms and independent research firms) to identify the most attractive prospects. We stress test our investment theses in-house to decrease our exposure to non-systematic risk. Portfolio selections have expected returns greater than 20% in the 12 months from the time of purchase.

Buy Discipline
Risk management and top-down macro themes drive the final portfolio composition. Portfolios hold less than 25 positions, with an equal weighting in each name. Note that cash positions vary between 0 and 20% of the portfolio weight depending on our short-term investment outlook.

Sell Discipline
Our price target methodology is based on the reversion to mean valuation for our growth names and a discounted free cash flow for our value names. Positions are sold if price targets have been achieved or if there is a fundamental change to our investment thesis. In addition, a downside review is conducted if a stock falls 20% below the high water mark since initial purchase.

Risk Control
Our risk management discipline limits our individual sector exposure to 30% of each portfolio and single stock exposure to double initial weight. Portfolios are monitored using real-time portfolio tracking, attribution and risk management tools.