Quality is our Commitment
Atlanta Capital believes that you can’t deliver consistent quality without practicing it. Every day and in every way. That’s why we maintain an uncompromising approach to picking high quality investments that we trust will deliver long-term results for our clients.
We seek to invest in companies with a demonstrated history of consistent growth and stable earnings. In fixed income, we emphasize securities with stable and predictable cash flows, and low credit and event risk. We strive to provide this consistency as an asset to our clients for their investment needs. It’s part of our commitment to lasting relationships and long-term growth.
Going Beyond Market Cap
Equity portfolios are commonly diversified by collecting large cap or small cap stocks with different characteristics (value, core, or growth). This process is also associated with the typical “nine-square box” shown to investors. The theory behind this approach claims stock size and style characteristics strongly determine equity returns, and may reduce risk when combined within a portfolio.
Our research finds that ignoring quality and investing solely by capitalization and style is unwise. In fact, the quality of an individual stock tends to have a significant influence on an investor’s risk and return characteristics, and has historically been a stronger factor than stock size or style alone.
Finding and Measuring Quality
High quality stocks are seen as possessing consistent earnings growth and modest debt, and above average returns on invested capital. Companies with these financial characteristics typically have seasoned management teams and strong competitive positions in their key markets. Low quality stocks, on the other hand, are typically those with erratic or highly cyclical earnings, heavy debt burdens, and poor returns on capital. These companies tend to be smaller, have less effective managers, weaker market positions, and have shorter track records than higher quality companies.
CORE EQUITY INVESTMENT APPROACH
The core equity team is focused on producing an above-average compound rate of return while also protecting capital in down markets. We seek to own high quality businesses that dominate a niche, maintain high barriers to entry, and have consistent demand across an economic cycle. With this dedication to quality, we look at stocks as if we were a potential acquirer of the entire business.
- Construct a focused, diversified portfolio with a focus on companies with a demonstrated history of consistent growth and stability in earnings, strong free cash flow, and high returns on invested capital.
- Emphasize companies with management teams that have proven records of effective capital allocation and incentive structures that are aligned with shareholders.
- Calculate fair value by evaluating a company's historical valuation ranges and private market value.
- Sell a company if a more compelling investment opportunity materializes, there is a change in the investment thesis, or valuation becomes excessive.
GROWTH EQUITY INVESTMENT APPROACH
Our growth equity team is committed to building quality portfolios by investing in companies with demonstrated histories of consistent growth and stability in earnings. The team seeks to own large-cap companies with strong potential for long-term, sustainable earnings growth. With a long-term perspective, we seek to buy these companies when stock prices are trading below our intrinsic value estimates.
- Focus on companies with dominant franchises, consistent growth, and stability in earnings.
- Conduct fundamental analysis to determine the long-term competitive advantages and secular tailwinds for sustainable earnings growth.
- Construct diversified portfolios of companies with a multi-year investment horizon, purchased when they are priced attractively relative to our estimate of intrinsic value.
- Sell a company if a more compelling opportunity materializes, a change in investment thesis or deteriorating fundamentals, or valuation becomes excessive.
FIXED INCOME INVESTMENT APPROACH
Our fixed income team focuses on securities with high credit quality and stable cash flow. We emphasize government issued mortgage-backed securities (MBS), including collateralized mortgage obligations (CMOs), and ‘AAA’ asset-backed securities (ABS). We feel that these securities can deliver attractive yields while limiting credit and event risk. We seek to add value from security selection, sector allocation and yield curve positioning.
- Customize portfolios based on the unique needs and circumstances of each client.
- Emphasize areas along the yield curve with the greatest return potential.
- Perform rigorous security analysis to confirm credit quality and cash flow stability.
- Uncover and analyze loan level attributes that can lead to better performance.
- Actively manage sectors and sub-sectors to seek most attractive valuations.
NEWS & UPDATES
The New York Stock Exchange welcomes executives and guests of Atlanta Capital celebrating their 50th year in the investment management business.READ MORE