DuPont Capital’s active equity strategies seek to identify and target sustainable inefficiencies specific to the asset class. Within the US Large and Mid Cap space, DuPont Capital invests in companies with strong franchises, significant free cash flow (FCF) generation power, and value-generating capital allocation policies. The firm believes that strategic use of cash exceeding a company’s organic growth needs can have a significant impact on the long-term value of an investment.
The firm finds that high-quality, reasonably priced stocks with high levels of free cash flow generating power are best identified using a fundamental research approach supplemented by proprietary quantitative screens. Analysts use a structured research process to look for five key characteristics in a company including industry leading position, favorable competitive environment, excellent management team, superior growth outlook, and alignment of interests between management and shareholders. These “value creating” characteristics, as measured by Return on Invested Capital, are blended with relative valuation measures to determine the optimal investments for the strategy.
Due to the time required to realize value from the investments, the strategy is best executed over a long-term investment horizon.
Author: Kevin Fogarty, CFA, Portfolio Manager, Value Creators Team & Brent Robinson, CFA Equity Analyst, Value Creators Team
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Author: Kevin Fogarty, CFA, Portfolio Manager and Senior Equity Analyst
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Portfolio Manager and Senior Equity Analyst