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STOCK SELECTION

HOW WE INVEST  |  STOCK SELECTION

Our investment process can be broken down into four steps. 

 

Market Analysis

We take a broad view of the market and economy, which informs our determination of how aggressive or cautious to be and which sectors and industries to focus on. 

 

Sector Analysis

Sector selection is based on considerations such as macroeconomic and market analysis, competitive dynamics, trend in capacity, valuation, sentiment, management behavior, substitutability, growth potential, and market anomalies. 

 

Quantitative Analysis

This includes a company’s valuation metrics (such as free cash flow yield, price/earnings, price/sales), as well as various aspects of the company’s financial statements, such as how it is deploying its capital, trends in its capitalization structure, and its profitability. 

 

Qualitative Analysis

We assess the fundamentals of the company’s business, generally favoring those with barriers to entry, pricing power, network effects, limited competition, lock-in effects – attributes that create sustainable competitive advantages. Often we invest in such companies when they are out of favor for short-term reasons. 

 

We are looking for stocks in which there is a favorable gap between market price and what we estimate as fair value.  This is often defined as value investing, but we frequently venture into traditional growth stocks if the situation is right.  We are just as willing to consider a company with a great growth profile as we are a lowly valued one, as long as the price is appealing. 

 

In this profession, the expectations that are embedded in the price of a stock are extremely important - a fact that we believe is regularly forgotten or just plain not understood.  It is revisions to expectations that determine how a stock performs, whether that be through a lowly valued company’s business becoming less bad or a well-positioned juggernaut gradually earning the respect of the market through its consistent growth.  The future is unpredictable, and the potential range of outcomes tends to be underestimated.  Given this, and given the important role that embedded expectations play in the performance of a stock, it seems wise to us to gravitate toward situations in which the risk-reward appears to be positively skewed.

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For more information on a separately managed account, please contact us.

Form ADV  |  Form CRS  |  Terms of Use

Note to Financial Advisors: Please contact your custodian/broker dealer to request that TOWFX and TOWTX be added to your broker dealer’s platform.  Advisor demand is necessary for Towpath Focus Fund and Towpath Technology Fund to be considered for your platform. Please contact us with any questions.

 

IMPORTANT INFORMATION:

There can be no guarantee that any strategy (risk management or otherwise) will be successful.  All investing involves risk, including potential loss of principal. “Prior Fund” does not represent the performance of Towpath Focus Fund.

Equity Risk: Equity security values held by the Fund may fall due to general market and economic conditions, perceptions regarding the industries in which the issuers of the securities participate or other factors relating to the companies.  

 

Limited History of Operations: The Fund is a new mutual fund and has a limited history of operations for investors to evaluate. 

Management Risk: The Fund is an actively managed portfolio. The Adviser will apply investment techniques and risk analyses in making investment decisions for the Fund, but there can be no guarantee that the Fund will achieve its investment objective. The Adviser may select investments that do not perform as anticipated by the Adviser. The Fund could lose value or its investment results could lag relevant benchmarks or other funds with similar objectives.

An investor should carefully consider Towpath Focus Fund's (TOWFX) investment objectives, risks, charges and expenses before investing. This and other important information about Towpath Focus Fund can be found by downloading the Fund’s prospectus and summary prospectus. To obtain a hard copy of the prospectus, please call Shareholder Services at  877-593-8637. Please read the prospectus carefully before investing.

An investor should carefully consider Towpath Technology Fund'
s (TOWTX) investment objectives, risks, charges and expenses before investing. This and other important information about Towpath Technology Fund can be found by downloading the Fund’s prospectus and summary prospectus. To obtain a hard copy of the prospectus, please call Shareholder Services at  877-593-8637. Please read the prospectus carefully before investing. 

Towpath Focus Fund (TOWFX) and Towpath Technology Fund (TOWTX) are distributed by Foreside Financial Services, LLC.

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