Corvara believes that consistently applying growth and high quality investment criteria, using a disciplined investment process, and building high active share portfolios can provide long term excess return above relevant benchmarks.
Corvara’s investment strategy rests on a limited number of core beliefs:
Corvara believes that high quality companies outperform in down markets and outperform the broad market over time. The highest quality companies have high returns on capital, attractive business models supported by higher barriers to entry, and sustainable competitive advantages addressing end markets characterized by stable growth.
Corvara identifies undervalued global companies expected to generate greater than average earnings growth. Quality companies with sustainable earnings growth outperform over time.
Corvara focuses on high conviction ideas and thus limits its portfolio holdings to 20 to 30 global, liquid, mid to large cap companies. High active share managers have outperformed diversified managers over the last 15 years.
Corvara applies a fundamental research approach to a set of companies that meet our investment criteria. Our investment criteria consist of high or improving ROIC (return on invested capital), a quality balance sheet supported by consistent free cash flow, high barriers to entry, sustainable competitive advantages, operating in markets with stable growth, value creating capital allocation, proven management, and valuation that support long term capital appreciation.
Companies that meet our criteria go through our quantitative and qualitative research process. The research process consists of initial findings, thesis development including determining upside potential, and more extensive fundamental research. If a stock meets our criteria, its fundamentals are strong, and the valuation represents significant upside potential, Corvara may include the investment in its portfolio.