Q:  Are these companies based in the US?

A: Yes. K-Tron is based in southern New Jersey and Sequa is headquartered in New York City. They have operations throughout the country and globally, too. On the one hand, the global story is even good for them because more and more planes are bought in China and India and Middle East. But on the other hand, but they tend to be all serviced by the same group of suppliers, and they have done a good job in moving some of their cost lower to lower cost areas where it’s appropriate.

Q:  Would you like to discuss more in the research process?

A: Our research process is a fundamental process where we are diving deep T into the numbers, trying to understand the external environment and the company itself. We go back to the documents to get the real facts. We are looking for three key things - valuation, a management with a plan that will enhance the value of the business, and indications that they are executing against that plan effectively.

Q:  How do you go about portfolio construction?

A: Our portfolio which is built from the bottom up, one stock at a time. We are typically running with around seventyfive names, not equally weighted. We’ll weight them according to our confidence in the plan and in our ability to buy stocks at prices that we think are advantageous.

Q:  Do you measure yourself against any benchmark?

A: We diversify, but we don’t look specifically against a benchmark. We compare ourselves to the Russell 2000 Index but the key thing is to deliver the best taxefficient performance for our investors over a three-year period. That’s the period that we like to look at ourselves within because we think if you try to do longer than that, then it gets a little tedious for people to look at, but if you look in a shorter period, you run the risk of having people getting distracted by the various fluctuations within the market.

But ultimately, our focus is to work in the space and try to deliver the best tax-efficient performance over the 3-year period.

Q:  How do you mitigate risk?

A: We mitigate risk by diversification, by knowing the companies, and by looking at the individual risks of those holdings. We want to know whether this is a great management, a good management, or a so-so management. We look for management teams building solid companies with good cash flows.