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River Road’s investment philosophy is based upon the Absolute Value approach developed by company founder Jim Shircliff. The objective of Absolute Value investing is to provide attractive, sustainable returns over the long-term. At River Road, we believe integral to this objective is an emphasis on positive return consistency and, correspondingly, minimizing downside portfolio risk.
River Road’s Absolute Value discipline incorporates what we believe to be the most proven and enduring principles of value investing, with a specific avoidance of the pitfalls associated with the more common ‘Deep Value’ and ‘Relative Value’ investment styles.
Specifically, River Road’s Absolute Value philosophy is distinguished by four tenets:
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We Seek Excellent Companies Trading At Compelling Prices
Our objective is to invest in well-managed, financially strong companies trading at compelling prices, not mediocre businesses trading at deep discounts. We believe this strategy yields two key benefits: I) a higher quality investment portfolio; and, II) broader diversification potential. |
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We Build Portfolios One Company At A Time
We are true bottom-up investors; we do not chase market or index trends. We believe alpha is optimized, and portfolio risk minimized, by assessing individual companies based upon five characteristics: I) Financial Strength; II) Valuation; III) Business Model; IV) Management; and V) Visibility/Sentiment. |
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We Seek Market Inefficiencies
River Road’s Absolute Value approach is alpha-driven. Thus, we focus our efforts on less efficient market segments, including smaller capitalization securities, out-of-favor securities, and securities with little or no formal Wall Street analyst coverage. |
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We Are Risk Averse
We employ a strategy of balanced diversification and a structured sell discipline that minimizes both portfolio volatility and the potential loss of capital. |
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