Investment Objective

The Manager seeks to include only companies that meet rigorous criteria and that have a record of performance or opportunity that the Manager can evaluate.

The process of selecting an investment includes, among other factors, evaluations of both qualitative and quantitative performance, opportunities, and applicable policies and procedures adopted by a prospectus investment. The Manager requires a prospective investment pass a comprehensive questionnaire, performs background checks on the Company’s managers and key personnel, performs on-site visits, interviews each prospective key personnel, reviews relevant offering documents, researches performances and review each operational infrastructure.

When choosing a company, the Manager will generally look for one or more of the following characteristics:

• Capable management;
• Attractive business niches;
• Pricing flexibility;
• Sound transparent financial and accounting practices;
• A potential or demonstrated ability to grow revenues, earnings, and cash flow consistently; and
• The potential for a catalyst (such as increased Member attention, asset sales, strong business prospects, or a change in management) to cause the Company’s value to increase

Investment Style: Company selection may reflect either a growth or value investment approach; however, a larger allocation will be growth orientated. For example, the Program may look for a company whose earnings is attractive relative to the underlying earnings growth rate of the industry or which is strategically positioned to take market share.  A value Company would be one where the Company is distressed, turning around, or appears undervalued in relation to earnings, projected cash flow, or asset value per share.

In either case, the Manager will tend to invest in assets that will not be dilutive for more than a year and accretive thereafter.  Another factor the Manager will consider is strength of the company’s cash flow determined by Net Present Value (NPV) or Internal Rate of Return (IRR), an economic standard method for evaluating competing long-term projects in capital budgeting.

Next: Allocation