Sionna's Intrinsic Value Model
Firm Profile > Sionna’s Intrinsic Value Model
Sionna’s Intrinsic Value Model
Relative to the
Big Picture
Although our investment style is based upon bottom-up fundamental research, we consider what makes markets move and study how these movements relate to historical patterns. When warranted, we take market trends into consideration for buy/sell decisions. Dogmatic adherence to an investment process, while ignoring current market conditions, is irresponsible investment management. As a result, we apply our bottom-up process relative to the “big picture.”
Sionna applies extensive quantitative analysis backed by a qualitative “scrub test” to calculate a prospective stock’s intrinsic value and its portfolio suitability relative to other stocks in the Sionna universe. Sionna’s Intrinsic Value Model is a disciplined method that combines public information with in-house research focused on a combination of historical book value, return on equity (ROE) and relative price-to-earnings (P/E) ratio.
Quantitative Analysis
Sionna’s Intrinsic Value Model calculations are based on three key factors:
- Book Value
Managers focus on companies trading below the long-term average book value of the Toronto Stock Exchange (TSX). - Return on Equity (ROE)
As rational investors, we value companies that produce consistently strong profit and cash flow: the strongest “earning machines.” - Relative Price to Earnings (P/E)
We also determine how a stock has tended to be priced relative to the market: has it tended to trade at a premium or a discount?
Qualitative “Scrub Test”
Companies that meet these standards are then given a qualitative “scrub test.” This process includes an extensive review of a company’s public information and interviews with senior management conducted by Sionna’s investment professionals.
Firm Profile:
– Teresa Lee,
Portfolio Manager