Investment Process

RPA conducts fundamental security analysis as part of its bottom-up investing process. The process starts with an investment idea. We have many sources – something that was read, talked about or experienced. We have developed a base of knowledge in industries with strong secular trends. Examples are water, clean energy and healthy food.

To analyze the opportunity, we inspect financial statements and calculate valuation and return on capital ratios. We adjust the data for company specific issues and consider economic trends to “normalize” the ratios. If we find the valuation compelling, we examine management’s track record, and review insider and institutional share ownership.

Throughout the process, we evaluate the environmental, social, and governance characteristics of the underlying investment.

We believe the best way to control risk is to not overpay for investments. Diversification is defined in absolute terms, not in reference to benchmark sector weightings. Individual position weights are closely monitored to further minimize risk. News events, share price movement, or the discovery of a more promising investment may lead to a change in weighting.