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Market participants increasingly rely on managed assets (ETF’s, Individual Account Managers) for portfolio selection, and as a result asset allocation has superseded individual security selection.
For those investors still interested in security selection, sell-side research, national credit rating agencies, and other third-party research sources have often been deemed unreliable, biased, and self-serving.
Since investment returns are a function of price paid, income earned and sale price achieved, we believe all three are relevant inputs in identifying an asset’s total return potential on an absolute basis, relative to its peers, other securities from the same balance sheet, as well as the overall market expectations for fixed income and equity returns.
Sixty Guilders Value Research bridges the gap between fixed income and equity security analysis to ensure that investment (whether investing in debt or equities) expected return is consummate with the risk associated of owning that specific security. The expected return on an equity security is compared against the yield on a company’s debt, the earnings yield of the overall market, including adjustments for the uncertainty of the company’s future earnings power.
Fixed Income. It is our core belief that when managing fixed income assets, outperformance is generated primarily by avoiding deteriorating credits, rather than trying to guess future changes in the yield curve or market timing fixed income exposure.
Equities. Our investment methodology for equities is an extension of our fixed income analysis, where we view equities as the residual claim on a company’s assets following debt claims and other senior securities.
Our Rankings. We force rank all metrics for the companies in our universe so that 100% represents the top possible ranking and 10% represents the worst possible ranking. A ranking of 0% signifies that there is not enough readily available public information for a ranking.