Cadence constructs all-equity portfolios designed to fluctuate with market trends and outperform a relevant benchmark over a full market cycle, based on a disciplined growth philosophy and using bottom-up fundamental analysis.

Decision Making Process for Portfolio Management

Our three-step investment process applies the right balance of discipline and judgment to build client portfolios of outstanding, growing companies with attractive stock prices.  Step one is to prioritize a well-defined universe based on growth characteristics and valuation attributes to determine the level of growth we can buy for a given price.  Attractively priced companies with above-average growth become investment candidates on our Research Focus List. 

Step two is to qualify these candidates by conducting disciplined qualitative research to determine the pace and sustainability of each candidate’s earnings trend.  The objective is to understand the main drivers of the company’s earnings growth and its valuation.  The analysts conduct fundamental, bottom-up research on each potential stock from the top quintile of the screened universe to determine the source, pace and sustainability of earnings growth.  Discussions with management, Wall-Street analysts, suppliers and competitors augment their independent proprietary research. The focus of their analysis is centered on understanding the impact of top line revenue expectations, expansion of operating margins, strength of corporate balance sheet and the tenure and credibility of the company’s management team. 

Step three is implementation.  Each morning the investment team evaluates and discusses all buy and sell candidates, and shares authority for the final step – consistent, risk-controlled portfolio implementation.  Analysts present their research findings to the portfolio managers and that research is a significant factor in the decision-making process in building portfolios.  Such discussions can occur as part of our daily morning investment team meetings, or at any point during the day.  Portfolio managers and analysts maintain open-door and ongoing communications so that both are aware of market developments.  Investment action can be taken on a stock that is moving (buy or sell) at any time.

*Small Cap Growth portfolios consist of 90-100 stocks; Focused Growth portfolios consist of 35-45 stocks; Micro Cap Growth portfolios consist of 75-120 stocks.