Model Portfolio rmcduff:RMG1

I seek to exploit inefficiencies that exist in the buy/sell side research models for maximum benefit. The greatest gaps in investment coverage appear to exist in global companies, both large and small. I look to own emerging growth companies while paying no more than value prices.

For RMG1, I primarily own larger companies throughout the world featuring strong balance sheets, in investor friendly jurisdictions, that demonstrate accelerating EBITDA growth.

Companies reviewed should meet the following criteria:

1. Firms should sell for a healthy discount to their peer group on a forward EV/EBITDA basis. I prefer to own stocks which sell for 10X forward EVEBITDA or less.
2. The company must generate sufficient free cash flow to maintain and grow the business by a minimum 10% per year, without requiring financing. This degree of self sufficiency suggests that conventional investment coverage may be limited or possibly non existent.
3. Barriers to entry should be sizeable in the industry that the company operates in. I greatly prefer to own businesses that have monopoly or oligopoly characteristics.
4. Close attention is paid to owning stocks which have experienced a catalyst that should increase EBITDA sharply. The positive catalyst also generally results in improved investment coverage, when sufficient time has passed for analysts to get a handle on the company.