INVESTMENT PHILOSOPHY

Fundamental Research

 

Through extensive research, we obtain a thorough understanding of the businesses that underlie our investments. As long-term owners of businesses, we want to understand why a company or industry is growing and whether it is likely to continue. We pay particular attention to revenue and earnings growth, return on equity, competitive strength and stability of the company.

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Rational Valuation

 

A fundamental factor in making good, long-term investments is refusing to overpay.  This mitigates risk by avoiding over-priced equities that can dramatically fall in value if their businesses slow for a time. In particular, we carefully review stocks for their forward price-to-earnings (P/E) ratios as a factor to help determine the value of the stock.

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Proven Track Record

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For the majority of our investments, we demand proven track records and a demonstrable ability to earn profits before we move forward.  This is another way that we mitigate risk for our clients.

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Long-Term Investment

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When we make an investment, we hold it for a relatively long period of time to benefit from the realization of the full value of the investment and its growth prospects. We typically keep our investment until the growth prospects diminish or its price relative to its earnings justifies its sale. As a result, gains are typically deferred and classified as long-term capital gains, and can receive more favorable tax treatment.

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Patience
 

At Naylor & Company, we are constantly looking for undervalued investment opportunities. Opportunities can take years to realize their full value. We call this time arbitrage. By being willing to be more patient than the rest of the market, we can obtain and benefit from some of the best values in the market.