SAM’s research process is designed to uncover investments with extraordinary or asymmetric risk/reward profiles (i.e. Steinberg Stocks). Fundamental analysis is SAM’s primary research tool in selecting securities.
SAM’s process is focused on understanding the key revenue drivers, margin profile and financial posture of a company’s business(es), beyond typical company reporting and sell-side analysis, and identifying the primary sources of earnings and positive free cash flows. This method of analysis allows SAM’s analysts to better understand businesses and engage in a far more robust and involved conversation with management teams.
The following evaluations are integral to every analysis:
- Business Evaluation
- Communication with Management
- Risk / Reward
- Invest in the Understandable
- Three to Five-Year Strategic Investment Horizon
- Identify "Free Calls"
- Establish a Target Entry Price
When used by SAM in describing its investment philosophy “free call” refers to a future event or transaction that may or may not occur, the value of which is not reflected in a company’s share price. For example, it could be the potential appreciation of intellectual property or increased demand for a product. This event or transaction when realized serves as a long-term catalyst for the share price and will, in SAM’s estimation, add value to the company that will be reflected in a higher share price as the market recognizes this. SAM is not implying that an investor receives securities or options in securities for no cost by use of the term “free call”.