Small/Mid Cap Equity - Davidson Investment Advisors
VideoSmall/Mid Cap Equity Strategy 
Philosophy/Mission Statement
The Small/Mid Cap Equity product philosophy calls for an intensive, research-driven approach focusing on small and medium sized companies which are largely undiscovered and/or misunderstood within the marketplace. Our philosophy of investing is rooted in the belief that companies which can maintain a sustainable competitive advantage within their given industry can outperform over the long-run given they possess an attractive valuation relative to their intrinsic cash flow potential. The mission is to create a portfolio of 30 to 40 quality companies, businesses whose long-term opportunity for growth can be identified in advance of the overall market.
Process
Davidson Investment Advisors' Small/Mid Cap Equity strategy process is incumbent upon the identification of companies who demonstrate positive operating leverage, an efficient utilization of capital and prudent debt levels. A discounted cash flow methodology is employed to assist in the determination of stocks which are trading below their prospective cash flow potential. Starting with a universe of stocks with no less than five days liquidity, based on average daily trading volume, the research process involves: quantitative and qualitative analysis as well as the assessment of fundamental criteria. Throughout, ideas are vetted with the entire investment team and summarized in a brief two page investment statement thesis. The portfolio leverages both internal and external sources of research including (but not limited to) company visits, discussions with vendors and competitors, industry journals, conferences, consultants and sell-side industry experts. The Small/Mid Cap Equity strategy will sell or trim a position if a stock becomes fully valued, a better alternative becomes available, fundamentals deteriorate, or for purposes of optimizing portfolio construction and/or risk characteristics.
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