We believe superior absolute returns are driven by a sound long-term macro-economic thesis coupled with an intensive bottom-up security analysis to construct a portfolio of the Firm's best ideas.
The team generates its macroeconomic views by observing and monitoring economic data trends coupled with insights from management teams across all industries. The Firm then attempts to identify investable themes to construct the portfolio. Investment themes typically represent at least 50% of our invested capital with the remaining capital invested in company specific ideas that are not tied to an individual investment theme.
The securities that are selected in the portfolio construction process are based on fundamental analysis of a company's balance sheet, free cash flow generation potential and earnings. A company's earnings quality, capital deployment history, and the strength of their balance sheet are heavily emphasized. Otter Creek mitigates its portfolio risk through diversification, comprehensive fundamental analysis, and a conservative asset deployment profile.