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Philosophy

The conceptual premise supporting Cardinal’s investment approach is that a company’s stock price is ultimately determined by a firm’s ability to generate excess cash flow and to redeploy that cash to enhance shareholder value. Based on our experience, we believe that conventional measures of value such as earnings and book value can be overly influenced by accounting conventions. We seek to generate above-average returns with less risk of loss through investing in a diversified portfolio of stocks which are inexpensive based on discounted cash flow analysis.

We focus our fundamental research efforts on companies whose businesses we consider stable and predictable and conduct our own intensive research to gain a clear understanding of the dynamics of the businesses that we are assessing. Cardinal’s investment philosophy is also distinguished by our use of a high discount rate so as to earn an attractive return and to mitigate the risk of loss in the long run.