Philosophy & Process

At Grisanti Capital Management (GCM), we strive to create long-term capital appreciation by assembling a concentrated portfolio of 15-25 high-quality and undervalued common stocks.  We believe our focus on valuation helps to limit the risk of the portfolioThe companies in the portfolio are predominantly large cap holdings (>90%), with no one position exceeding 8% at the time of purchase.  Our portfolio is not index-driven and does not mimic benchmarks, which is the primary reason for GCM’s long-term record of outperformance.

We want to own quality businesses that generate superior returns and cash flows via modest debt leverage.   We utilize two different methodologies to identify such opportunities.  One is cash flow at a discount, which focuses on earnings or other measures of cash flow that the company will produce in the future to justify a higher share price.  A second feature we look for are assets at discount.  Here we try to identify those companies whose current assets exceed the value of their share price.  This places less emphasis on future growth and more on current value.  We believe our disciplined and repeatable investment process unearths deeply undervalued securities, leading to superior risk-adjusted returns over the long haul.

As with any business, we think success begins with great leaders.  We look for businesses that have a history of share-holder friendly capital allocation, and a management whose long-term goals are aligned with shareholders.  Tightly aligned shareholder and management interests reinforce our conviction level for common stocks added to the portfolio.

 

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