Sionna’s Investment Process
Value: A Bottom-up Approach to Investing
Sionna assesses the value and quality of individual companies from the bottom up. We:
- Opportunistically invest in good businesses when they are temporarily undervalued
- Identify candidates through comprehensive fundamental analysis by:
- Getting behind the numbers
- Understanding business fundamentals
- Assessing management quality
To be successful over the long term, this process requires inquisitive minds, good judgment and a passion for investing.
Sionna specializes in a relative value method. History informs our process: we believe stock prices revert back to their mean (intrinsic value) over time. When determining the value of an individual company and whether a stock is undervalued, we consider where it has traded historically relative to the overall market and other names in the sector.
We’ve developed a proprietary screening tool – Sionna’s Intrinsic Value Model (IVM) – to focus our attention on 70 to 140 of the highest-potential stocks. The IVM:
- Produces a mathematical estimation of intrinsic value for individual stocks
- Helps us narrow our qualitative research focus to stocks that are attractively valued
We start with Sionna’s Research Questionnaire to draw out all aspects of a company in a disciplined manner. At this point in the process we:
- Investigate a company’s risks (cyclical, operational and financial)
- Complete an in-depth analysis of financial statements
- Have face-to-face meetings with management
- Arrange on-site visits with management
- Conduct other competitive reconnaissance
Environmental, Social and Governance (ESG) at Sionna
Sionna has integrated ESG questions into the Questionnaire – formalizing our process to ensure that any potential issues are raised and addressed during our fundamental research and analysis. Sionna's Responsible Investing Policy can be found here. Sionna also incorporates ESG factors into our ownership practices. Sionna's Active Ownership Policy can be found here.