Archalos Investment Strategy
Our portfolio is built on conviction, not compromise, because we believe our values, reflected in the cultures of the companies we invest in, lead to success in the marketplace. Unlike other values-based investment funds, we don’t just screen out companies that conflict with our values. We actively seek businesses that embody what we’re for.
We are for...
Companies that conduct business with integrity, marked by fair pricing, transparent contracts, and ethical dealings
Companies that view profit as a natural by-product of the pursuit of excellence, and not an end in itself
Companies that lead their markets through continuous innovation, using product vitality to maintain dominant market positions
Companies in which customer focus, relationship-building, and earned loyalty are not strategies but values
Companies that consistently give a portion of their profits to charitable causes which build up society, such as caring for the poor and underprivileged, promoting education, and upholding beneficial institutions and civil peace
Companies that use fair employment practices, treat their employees well, promote from within, and retain stable workforces
Qualitative Analysis
The most distinctive piece of our strategy is qualitative analysis. Most investors focus exclusively on financial data. At Archalos, we take a multi-faceted approach, enhancing financial and fundamental analysis with an emphasis on a company’s intangible qualities.
Our research and experience have led us to recognize common character traits of companies that consistently outperform. We believe it’s not a coincidence that these traits are in line with what it means to be a fundamentally good business, operating with excellence according to strong values. We've identified and systematized 15 – 20 intangible qualities which we analyze. Each of these traits is backed up by empirical studies demonstrating that businesses possessing these qualities tend to have enduring success.
To find and measure these traits, we have developed a proprietary framework, using a combination of software and analytical tools. By processing massive amounts of unstructured data (press releases, corporate filings, company statements, etc.) our tools enable us to identify which companies possess the qualities we believe will drive significant long-term investment returns.
Financial Analysis
Once we've identified winning companies based on qualitative factors, we use a combination of fundamental and valuation analysis to arrive at a portfolio focused on companies with enduring qualities that are strategically well-positioned in the marketplace. We emphasize financial health, the potential for long-term organic growth, a strategic and competitive market position, and cash flow generating ability.
Our financial analysis favors companies that are actively positioning themselves to profitably grow over the next decade, not just the next few quarters. This valuation framework underscores our commitment to favorable long-term risk & reward decisions.
