Our team based approach drives the consistency of our investment approach - all with the goal of helping our clients grow and protect their capital.

A Team Approach

The Westwood Funds are managed by a seasoned group of Analysts, Research Groups and Portfolio Teams. Rather than risk relying on a sole portfolio manager, our interwoven, collaborative team structure stimulates a dynamic cross-pollination of ideas and ensures consistency in the decision making process.

We utilize a rigorous 3-step process in the management of the Westwood Funds. Our approach seeks to identify companies with limited downside risk that we believe will generate better cash flow/earnings than what the current stock price implies.

Step 1: Analysts: Identify undervalued companies

Our Analysts are involved in every step of the investment process. Each Analyst is an industry specialist and is charged with conducting extensive proprietary fundamental research that involves:

  • Thoroughly understanding industry/sector trends, business fundamentals, competitors and risks.
  • Analyzing historical financial statements and developing three-year projections of a company's balance sheet, income statements and cash flow statements.
  • Validating the key metrics that identify companies that possess Westwood's essential quality and value characteristics.
  • Interviewing a company's senior management.
  • Determining what market misperceptions may be reflected in a company's stock price.
  • Identifying an investment catalyst or thesis.

Each Analyst presents their best ideas to a Research Group.

Step 2: Research Groups: Perform an Independent Peer Review

Four Research Groups, divided by economically-correlated industries, serve to ensure the quality of research. The Research Groups thoroughly scrutinize the findings of our Analysts, particularly their evaluation of the upside potential and downside risk assessment. This independent checks and balances practice is instrumental in identifying the best stocks for investment consideration. Stocks that pass this stage are placed on an “Approved List” for consideration by the Portfolio Teams.

Step 3: Portfolio Teams: Construct & Manage the Funds

Each of the Portfolio Teams is ultimately responsible for selecting the "best ideas" for their respective Fund. A bottom-up process is used to build portfolios that generally consists of an average of 45 to 60 stocks from the "Approved List." The merits of each individual security and its impact on the reward-to-risk ratio of the overall portfolio are key considerations before adding it to the Fund. The team continually reviews new ideas from the "Approved List" to replace current holdings when adjustments are warranted.

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