Schafer Cullen Value Equity


Investment Process

The Schafer Cullen investment team relies heavily on fundamental research as part of its investment selection process. Because the firm has a disciplined value investment philosophy, a rigorous review of company fundamentals vs. industry peer and the overall market is an important part of the investment process.

Screen For Value:

  • Begin with largest 3,000 publicly traded equities
  • Typical market capitalization > $3 billion
  • Identify sector and industry inflection points

Fundamental Research:

  • Screen for stocks in bottom quintile according to P/E and P/B basis
  • Prefer dividend yield
  • Seek low debt to equity and high returns on investable capital
  • Search for catalyst that can drive earnings, including:
    • New markets
    • New products
    • Strong managements with clear vision and commitment to shareholder value

Portfolio Construction:

  • Approximately 30-45 holdings
  • Diversification across 15-20 industries
  • Full position approximately 3%
  • Top 10 holdings typically represent 30 – 35%
  • Up to 25% international exposure (ADR) at cost
  • No more than 30% in any one sector at cost
  • No more than 15% in any one industry at cost
  • No more than 5% in any one stock at cost

Sell Discipline:

  • Price objectives reached
  • Earnings growth not realized
  • Deteriorating fundamentals
  • Decline of 25% - investment thesis reassured