Our investment approach is contrarian with a value discipline and a focus on turnarounds and restructurings. We search for out of favor companies with "hidden jewels" that are selling at large discounts to their future “restructured earnings power”. Our discipline leads us to research and value individual business segments where there is an opportunity for smart and motivated management teams to fix, restructure and grow the company to unleash higher earnings that ultimately lead to higher stock prices. The investment approach is strictly "hands-on" stockpicking based on extensive fundamental analysis and personal meetings with senior management.
Sasco Capital's proprietary research process identifies companies considered financial underachievers: underperforming, diversified companies where low-return divisions are masking the profitability of good businesses elsewhere in the company (the “hidden jewels”). Extensive fundamental analysis of segment values and restructuring opportunities, combined with meetings with senior management, enable us to value the businesses, evaluate management's ability to execute the required changes, and to project the future earning power of a company. All research, investment decision-making and portfolio construction is done on a team basis by Sasco’s Portfolio Managers and Research Analysts.
We manage a concentrated portfolio of a maximum of 35 stocks characterized by a high active ratio. Our investment approach provides for an average holding period of about three years. We remain fully invested at all times. We do not employ options, futures or derivative instruments. Portfolio weightings are determined by relative risk/reward and liquidity measures of individual issues. Weightings of 3 to 5% are deemed appropriate for achieving superior returns. All portfolios are managed identically.