Diamonds in the Rough: How We Uncover New Investment Ideas

In a competitive investment management environment, every asset manager must seek differentiated ways to add value for clients.

At Dana, we take several steps within the idea generation, portfolio construction and risk management process that we believe distinguishes our strategies. This excerpt from a Q&A with our portfolio managers shares how we arrive at different investment ideas:

What are some ways your idea generation might differ from other active managers?

Our idea generation is entirely independent. We don’t get them from road shows, industry conferences or sell-side calls. While our stock selection process is ultimately qualitative, we blend that with a unique quantitative process that helps us sift through the entire stock universe and ensures there’s not a company with attractive characteristics we might have missed on our own.

Our quantitative screens rank the respective universe for a given strategy based on three factors: a relative valuation model, a value relative to growth screen and an estimate revisions model. A key tenet of our investment philosophy is that we don’t want to overpay for growth. The first two screens help us identify attractively valued growth companies. The estimate revisions model helps us avoid value traps and helps isolate the companies within a sector or industry that have positive or buoyant earnings characteristics. Used in tandem, these screens are an efficiency tool for our analysts that also open them to a host of undiscovered ideas.

For more, download our Q&A to learn more about what sets apart our portfolio construction and risk management capabilities.


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