Our Philosophy
Our North Star is Buying Undervalued Companies with Unrecognized Long-Term Growth Potential
As our investors know, Eagle Capital focuses intensely on the drivers of long-term value creation. We use a fundamental, bottom-up research approach that seeks to identify undervalued companies with unrecognized growth potential and stocks that are inexpensive relative to their core earnings power and long-term prospects. Our time horizon uniquely positions us to think differently about what drives and influences industries and companies.
Our investment team strives to build a portfolio of businesses with two primary characteristics:
The underlying assets are strong enough to generate cash flow and maintain a value floor for the investment, even in times of stress.
There is some change afoot that is unrecognized by the market and likely to be valuable in the out years.
If we get those two pieces correct, we believe that the value part of our work should defend the portfolio when times are bad, while the eventual realization of the change should generate extra returns when things go right.
These two timeless principles of Eagle are where we focus our energy and where we believe we can gain a sustainable competitive advantage. And this is the reason that our philosophy and process have been consistent since our firm’s inception, enabling us to significantly outperform the market since 1988.
We are Value-Oriented Investors with a Long-Term Horizon
We assess the price relative to long-term intrinsic value – not simply a low P/E or low P/B.
Our investment team focuses on years 5 and beyond. We debate what will the business, growth prospects, margins and industry dynamics look like in those out years. Does the market recognize the potential we see?
We seek to identify a “Margin of Safety” which we derive from valuation discounts, business durability, growth opportunities, and experienced and aligned management.
We Focus our Portfolio on the Highest Conviction Stocks
We concentrate our portfolio on 25-35 stocks, with the top ten positions typically representing ~60% of the portfolio.
The Eagle team has the experience, resources and patience to find risk asymmetric opportunities in the market.
We seek to construct the portfolio so that our top positions have attractive upside with strong downside protection.
Eagle takes a Private Equity-like Approach to the Public Equity Markets
Eagle strives to build positions in high quality businesses with above market returns and durability, combined with downside protection.
We engage in a rigorous due diligence process before we invest in a company.
We value and utilize our access to senior management at our portfolio companies – allowing us to better understand their long-term goals and giving us the confidence to move resolutely when the opportunity arises.
