Our alpha thesis encapsulates a deeply held system of persistent beliefs, a rigorous, repeatable investment process and substantive proof points. We believe a focus on the quality of a manager’s investment philosophy, process and decision-making is essential for assessing the probability of future success. In our view, investors and other stakeholders can benefit when long-term structural, strategic and financially material ESG considerations are an integral part of an active, long-term, research-driven investment process. Guided by our alpha thesis and with an owner’s mindset, the Growth Equity Strategies (“GES”) team seeks to develop a deep understanding of the drivers, opportunities and limits of each company, including material ESG considerations, through our disciplined and thorough bottom-up fundamental analysis.

We are an active manager with a long-term, private equity approach to investing. Through our proprietary bottom-up research framework, we look to invest in those few high-quality businesses with sustainable competitive advantages and profitable growth when they trade at a significant discount to intrinsic value.

Our investment philosophy represents our fundamental beliefs regarding the most effective way to generate alpha, and leverages our understanding of persistent anomalies that create asset mispricing.

A long investment time horizon is central to our investment philosophy and process. We believe the short-termism, so prevalent in today’s market, is detrimental to sustainability and value creation. The GES team has consistently executed the same investment philosophy, research framework and investment process since July 1, 2006*, when we launched our Large Cap Growth and All Cap Growth strategies. It is the foundation of all GES investment strategies, including our Global Growth strategy launched on January 1, 2016, our International Growth strategy launched on January 1, 2020 and our Long/Short Growth Equity strategy launched on February 1, 2012.

Since inception annualized turnover as of 9/30/2023:

Our GES proprietary seven-step research framework is the cornerstone of our investment decision-making process and drives our security selection. The research framework represents our long-standing insights about investing and is structured around three key criteria: Quality, Growth and Valuation. With an owner’s mindset, we seek a deep understanding of the drivers, opportunities and limits, including ESG criteria, for each company over our long investment horizon.

The structural opportunities and risks associated with ESG matters are linked to business activities, which include management’s long-term strategic focus, the business model structure, competitive positioning and the productive allocation of capital. Therefore, ESG considerations can be structural to each step of our research framework and are integral to our analysis of business models, competitive advantages, operating efficiency, corporate management strategy and integrity, profitable growth, and our intrinsic valuation. Our goal is to distinguish between those companies that we believe are long-term structural winners and those we believe are the structural losers. Our valuation analysis, which is at the heart of our research and decision-making, is only as good as our ability to understand and identify high-quality companies and evaluate the sustainability of profitable growth.

Our investment process begins with the art of trying to identify high-quality companies — those with unique, difficult-to-replicate business models and sustainable competitive advantages. Many ESG considerations are embedded in our quality assessment of a company, which are incorporated as the first four steps of our seven-step research process. Meeting the criteria of the Quality Analysis is binding for the Investment Manager. If a company does not meet the Quality criteria, it is eliminated from our investment universe.

We develop long-term constructive relationships with management through regular and recurring dialogue regarding key decision-making criteria, which includes ESG topics. We believe a long-term orientation is fundamental to a strategic decision-making framework. Therefore, we seek to invest with management teams who share our long-term perspective and who view ESG integration as a launch pad for innovation, competitive differentiation, and continuous improvement. We believe ESG challenges are integral to a company management’s long-term strategic decision-making, not merely a check-the-box exercise.

Not only can ESG considerations strengthen the virtuous cycle of quality characteristics that help sustain and extend competitive advantages, it can also help manage downside risks. Company management must necessarily weigh and manage the interests of various stakeholders including employees, customers, supply chain partners, and local communities, as well as resource stewardship. Evaluating management’s ability to allocate capital to investments creating long-term shareholder value is essential to our quality assessment of each company. We believe management teams focused on short-term objectives cannot realize long-term results.

We believe generating alpha requires both active investment management and active risk management. We believe that we cannot truly manage risk at the portfolio level if we do not first manage risk at the individual security level. We take a long-term structural and permanent approach to risk management. Therefore, our risk management is an integral part of our investment process, not a separate overlay or optimization process. The same is true for ESG integration. As with our active risk management, material and structural ESG considerations are integral to our analysis of business models, competitive advantages, operating efficiency, corporate management integrity, profitable growth, and our intrinsic valuation.

The search for alpha is the search for skill. We believe our alpha thesis, and our ability to consistently implement its tenets, constitutes a differentiated approach. The deeply held beliefs and disciplined process guide what we do every day.