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. More information on ESG at Sionna, can be found here.