Investment Strategy

Our Investment Strategy

Our investment strategy is centered on achieving long-term capital appreciation by employing a meticulous in-house research and analysis process. This involves gaining a comprehensive understanding of a company's value in relation to other available opportunities. At Dean Ryle, we prioritize risk management and incorporate it into our portfolio construction.

Our strategy focuses on investing in U.S. companies primarily through the acquisition of common stock. We seek out public companies that exhibit specific characteristics:

High Free Cash Flow to the Firm (FCFF) relative to the stock price: We target companies that generate excess cash beyond their annual capital requirements compared to the stock's price, often referred to as free cash flow yield.
Low volatility in FCFF: Ideally, the companies we invest in display stable and predictable cash flows, providing a level of certainty.
High growth in FCFF: We look for companies with a track record of increasing free cash flows over time, indicating their ability to grow.
High growth in operating revenues: We seek companies that demonstrate consistent growth in their operating revenues.
Simple and easy business models: We refrain from investing in companies that we cannot explain in relatively simple terms, favoring clarity and transparency.
Dominant position in the industry: We target companies that have weathered economic downturns and emerged stronger, establishing themselves as leaders in their respective industries.
Superior returns on capital: We favor companies that achieve high margins and deliver exceptional returns on invested capital.
Sustainable competitive advantages: We seek out companies with competitive advantages that shield them from competition and enable management to raise prices above inflation without sacrificing market share.
Strong balance sheet: We prioritize companies with moderate levels of leverage and a robust financial position.
Quality management: We seek companies with a proven track record of outstanding performance, led by management that exhibits honesty, intelligence, and integrity.

By adhering to these criteria, we strive to construct portfolios that have the potential for long-term success and deliver favorable investment outcomes for our clients.