Investment Strategy & Philosophy
We believe the cornerstone of successful investing is owning quality companies run by shareholder friendly management teams. We seek to own businesses that generate ample cash flow and that reinvest the funds in opportunities that maintain or expand the firm’s return on invested capital. When attractive reinvestment opportunities are scarce, we like management teams that return excess capital to shareholders through dividend payments or share repurchases. Our universe of potential investments is broad and extends across all market capitalizations. We rely on our own investment research, not the opinions of brokerage firms.
Fixed Income Philosophy
At Ayrshire Capital, fixed income investments are utilized to protect capital and to provide a dependable source of income. We do not believe in taking significant credit or duration risk in bonds. We focus our efforts on owning Corporate, Municipal, and Government instruments, with an emphasis on maximizing after tax yield. We will also invest in REITs, MLP’s, and preferred securities when the additional risk/reward trade-off appears attractive.
Security Research Discipline
Our research is based upon fundamental analysis of an enterprises’ strengths and weaknesses. We identify key factors when we invest in a business. Through our research, we consider:
- Businesses with consistent/improving returns on invested capital
- The relative valuation of the business versus its historic range and its peers
- The “intrinsic value” of the firm – what it would cost to recreate/replace the business
- Strong balance sheet management
- Conservative capital structure
- Secular growth opportunities within the industry
- Global growth opportunities
Security Sell Discipline
As a fiduciary of client assets, it is essential that investments are regularly evaluated to ascertain they continue to meet client objectives. We may sell a security for any of the following reasons:
- If the reason we purchased an investment no longer holds, we sell.
- A change in the fundamental outlook for the business
- The valuation of the investment significantly exceeds its historic range.
- Company management pursues a strategy we do not understand.
- Economic or secular forces indicate the business environment may deteriorate significantly.