The Morgan Dempsey Mid-Cap strategy seeks long term capital appreciation by investing in a diversified portfolio of primarily mid-cap companies that have attractive business models and strong management teams. We believe that capable management teams can produce superior results over time when they are not constrained by weak balance sheets. We believe in investing in such companies at attractive valuations.
The Qualities We Focus on Are More Important Now Than Ever
“A Rising tide lifts all boats” is a popular aphorism on Wall Street. It implies that against a strong macro-economic backdrop, a majority of companies do well. However, during uncertain economic times the true prowess of strong management teams is displayed. We believe that partnering with strong management teams will help us produce competitive results during strong economic times and outperform during periods of uncertainty.
Business Model We prefer simple, easy to understand business models. In our analysis of the business model we are essentially trying to answer the question – “How does this company make money?”
Management Team We place an emphasis on strong management teams. Delving into 10-K’s/10-Q’s/Press Releases and Conference transcripts helps us understand how the company has evolved and how the management team has steered the ship over time.
Valuation We value companies using P/E, EV/EBITDA ratios while keeping in perspective where the company is at, in their earnings cycle.
Leverage We assess the debt and cash flow characteristics of the business and try to steer away from companies with weak balance sheets.