Philosophy
We believe our philosophy provides a time-tested foundation for our repeatable value investment discipline
Bottom Up
Thorough bottom up due diligence on every holding
Concentrated
Every name in the portfolio matters
![](https://cliffordcap.com/wp-content/uploads/2023/05/5.3-ICON-01.png)
High Conviction
Deep understanding of each business and risk
Benchmark Aware
Not benchmark driven
Our Process
Investment Criteria
- Core Value
- Deep Value
- Outside Clifford Criteria
Core Value
Deep Value
- Through our proprietary Ten Point Review Process, we have pre-identified a short list of wide-moat businesses with high long-term financial return profiles, sustainable competitive advantages, and strong management teams.
- Sometimes even the best companies in the US Stock Exchange are sold off by investors. If a Core Value name falls into our valuation range, we put it on our short list for further evaluation
- If we identify Key Thesis Points™ (long-term catalysts) unique to that company that we believe will improve fundamentals, and we think the reward/risk ratio is at least 3/1, we may purchase the name in the portfolio.
Deep Value
- We constantly scour the market in areas that have been sold off. There are many ways that contrarian opportunities present themselves.
- If a company reaches our valuation qualification and passes our balance sheet criteria, we put it on our “short list” for further evaluation.
- After further review, if we identify Key Thesis Points™ (long-term catalysts) unique to that company that we believe will improve fundamentals and the reward/risk ratio is at least 3/1, we may purchase the name in the portfolio. We seek opportunities with significant upside for the Deep Value Sleeve of the portfolio.
Risk Mitigation
Multiple Risk-Mitigation Disciplines
Our Sell Discipline
![](https://cliffordcap.com/wp-content/uploads/2023/02/111-1.webp)
Better Idea
We will replace a name for a significantly better reward/risk opportunity.
![](https://cliffordcap.com/wp-content/uploads/2023/02/11-1.webp)
Change in Thesis
If new information suggests we have made a mistake or Key Thesis Points™ is broken, we will immediately liquidate the position.
![](https://cliffordcap.com/wp-content/uploads/2023/02/121-1.webp)
Trimming
If a position becomes too large or the reward/risk ratio is less favorable, we will likely trim it down.
![](https://cliffordcap.com/wp-content/uploads/2023/02/1211.webp)
Valuation
Deep Value names are sold at fair value estimates. Core Value holdings are sold based on valuation alone only when we believe they are significantly stretched.
Tax Efficiency is a Byproduct of our Disciplined Process
![](https://cliffordcap.com/wp-content/uploads/2023/02/Asset-9.png)
The visual shown above is for illustrative purposes only and does not guarantee a certain level of performance or success. Not all investments will reach or exceed their estimated fair market value. Investors can lose all or part of their money.
Buy & Hold
Longer holding periods are inherently more tax efficient.
Strategy Implementation
We maintain a contrarian discipline of buying out of favor stocks. Generally we make a small initial purchase (1-2%) with anticipation of further price declines and additional buying opportunities. Dollar cost averaging produces a variety of tax lots. As stocks rebound toward fair value estimates, higher cost lots offset embedded gains, leading to a more tax efficient portfolio.
While low tax implications are not the main focus of the strategy, they tend to be a by-product of our disciplined buy/sell process. The mutual fund vehicles of our strategies illustrate the tax efficiency. (see mutual fund distribution history for more information)