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What We Do
 
 
 
Expertise Information about our experience and capabilities
Philosophy Our approach to investment management and to delivering consistent added value
Approach Our approach to investment management, research, opportunities and risk
Investing with Global Alpha Our approach and commitment to servicing our clients
Commentaries Access our commentaries on relevant issues to our portfolios.

Small Cap. Global. Alpha.

Approach

Thematic Approach

In determining whether a good company is also a good investment, Global Alpha considers stock valuations in the context of an investment theme rather than a purely bottom-up thesis. Portfolios are constructed according to asymmetric, uncorrelated economic and global market themes rather than a stock’s relative valuation within its industry sector.

A Big Universe of Small Cap Companies

Our investment universe includes all companies with market capitalizations ranging from approximately US$150 million to US$5 billion. In the search for companies with unrecognized growth potential, we utilize various screening methodologies across global databases to identify those companies that offer strong financial productivity, a historical pattern of earnings growth and management teams with a significant ownership stake.

Knowing What to Buy

Each company is subjected to a thorough assessment of its business model. Screening on measures such as profitability, revenue growth and balance sheet strength help narrow the universe. Through fundamental analysis, management interviews and on-site visits, companies with features such as dominant market share, sustainable competitive advantage and clearly defined growth strategies are identified. A discounted cash flow analysis is conducted to determine implied margins, capital intensity and growth rates. Finally, an asset-based valuation analysis is conducted.

Knowing When to Buy

In determining whether a good company is also a good investment opportunity, we identify stocks trading at a significant discount to intrinsic value along with the catalysts expected to drive realization of their true value. From our best investment ideas, portfolios of 50-70 stocks are constructed.

Knowing When to Sell

Critical to realizing and protecting accumulated gains is to know when a security should be sold. We maintain the purity of our small cap portfolios by adhering to a strong sell discipline. Positions may be sold if: a company’s market capitalization exceeds the upper limit of the MSCI World Small Cap Index; there is a change in strategy, a loss of competitive advantage or an excessive valuation; or a better investment opportunity is identified.

Risk Management

By their nature, smaller companies tend to have higher levels of stock-specific risk. We manage this risk in three key ways: 1) rigorous research and due diligence when adding a stock to a portfolio, 2) blending stocks according to uncorrelated, asymmetric investment themes, and 3) inclusion of secular or cyclical companies identified through bottom-up analysis as having unrecognized growth and/or that add diversification to a portfolio.

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