Red Wave’s strategy involves investing primarily in liquid equity and fixed income securities. I invest clients’ money only when I believe I have found a quality company at an attractive price.
My approach involves both a top-down approach and a bottoms-up approach. By this, I mean, I begin looking at industries and sectors I feel will be successful in the current macroeconomic environment. I study global and country specific growth expectations, consumer confidence and a variety of other macroeconomic statistics as well as our view on global trends. I combine this macro view with fundamental research done on a company specific basis.
I’m looking for good companies in the sectors of the economy I think will strive. To analyze a company, I look at qualitative and quantitative measures. Analyzing the company’s cash flow generation, its balance sheet strength, its historical sales and profitability trends, etc. I also look at its management team, their commitment to increasing shareholder value, past and expected capital allocation decisions, etc.
After reviewing many companies in a variety of industries, I have a good understanding of relative value of potential investments. Investment decisions are based on that research.