Our funds approach the global marketplace in a similar fashion; we focus on free cash flow: earnings before interest, taxes, depreciation and amortization ("EBITDA") minus the capital expenditures necessary to grow the business. We believe free cash flow is the best barometer of a business' value. Deteriorating or rising free cash flow often foreshadows net earnings changes. We also look at earnings per share trends.

Unlike Wall Street's earnings momentum players, we do not try to forecast earnings with accounting precision and then trade stocks based on quarterly expectations and realities. We simply try to position ourselves in front of long-term earnings trends. In addition, we analyze on and off balance sheet assets and liabilities such as property, plant and equipment, inventories, receivables, and legal, environmental and health care issues. We want to know everything and anything that will add to, or detract from, our valuation models.

We calculate the Private Market Value ("PMV") estimate of the business, which is what an informed industrialist would pay for a business. Effectively, it is intrinsic value plus a strategic premium. Finally, we look for a catalyst: something happening in the company's industry or indigenous to the company itself that will help realize returns.