Ideas

To provide more insight into our process and what kind of questions we ask when evaluating a business, we added an ideas section to the Porter Street website. 

What We Look For

When we evaluate a long investment, we are trying to understand how a business could perform in 3-5 years under certain conditions. Then we attempt to asses whether the business value today is materially different than what is implied, discounted back at some required rate of return. With the recent market volatility and the wall of worries investors face heading into 2019 and beyond, we acknowledge the difficulty and even futility in trying to look out that far. We could put our heads in the sand. Instead, we prefer to do the work. Our goal is to try and find companies that could perform well if the world does not end in 2019/2020. At the same time, if there is a slow down or recession, we want to have done the work to be able to get up speed and gain conviction to buy more of something at what are likely be much better prices.

New Research Initiative: Lean In

We are also adding a new theme to a portion of our research with an emphasis on companies that we think are going through “lean transformations”. Like Manitowoc, we are trying to find industrial businesses where there has been recent industry, product and/or management change and where the business is on a path to becoming more of a “lean enterprise”. Most companies implement some elements of lean manufacturing and thinking but very few create the pro-active problem solving, employee engagement and ownership culture to truly succeed over time. This is a new initiative and journey for us that is in the early stages. We started with Manitowoc and for now are evaluating Gardner Denver. We  plan to increase this area of focus for research in the future. The benefits of lean thinking and cultures can take years, if not decades to properly flow through and show up in a company’s financial statements. We think combining this new filter to view companies with Porter Street’s typical view on long investments is differentiated.  

Active Research Ideas as of 5/30/2019 (Click for PDF)

Longs

Shorts

Other Names We Are Monitoring Closely

Longs

Garret Motion (Ticker: GTX)

Orion Engineered Carbons (Ticker: OEC)

Packaging Corp (Ticker: PKG)

Crown Holdings (Ticker: CCK)

Advansix (Ticker: ASIX)

Perspecta (Ticker: PRSP)

Shorts

Lands End (Ticker: LE)

Acadia Healthcare (Ticker: ACHC)

Hanesbrands (Ticker: HBI)