Capitalizing on Change and Neglect
CRM strives to invest at the intersection of change and neglect and the intellectual coherence of our investment philosophy offers a genuine benefit to our clients. Companies we buy and hold are typically characterized by three attributes: change, neglect and valuation.
Change
The financial markets are rich with change. Every day the markets present investors with mergers, divestitures, restructurings, new management teams or new products and expanded markets.
Neglect
Especially in its early stages, change tends to be greeted with uncertainty, expressed as investor neglect — manifested through behavioral finance, low analytical coverage, negative to neutral stock ratings and low institutional ownership.
Valuation
When change meets neglect, the intrinsic value of a company may exceed the current stock price. At the intersection of change and neglect with attractive valuation, CRM finds the potential for substantial outperformance.
The conviction to invest before the rewards of change are realized requires an investment process grounded in intensive original research.
“I have seen a lot of markets. I have seen a lot of fads and different styles of investing. An important element for successfully investing in stocks is not to follow the crowd, but to follow the road less traveled.”