Edgewood Management LLC

Due Diligence

Edgewood's Investment Committee recognizes there are a relatively limited number of companies that capture our ideal investment characteristics.  The team performs diligent fundamental research and analysis to assess the companies that are optimally positioned possessing those characteristics. At any one time we will have 50 to 75 growth companies in our universe that fit our business criteria, companies with:

  • Low Debt
  • Unit Volume Growth
  • Strong Cash Flow
  • Earnings Growth

Since we look at any potential investment as though we are buying the whole business, we spend a lot of time studying the industry, the industry participants, and the drivers of the revenue and expenses in an effort to come up with an accurate industry growth rate for the future.

We visit every company that we invest in and spend time with customers, suppliers and competitors to understand the business and see how that business fits within its industry in an effort to come up with an accurate five and ten year earnings forecast.

Fundamental Analysis

  1. Financial Model Strength
    • Growing cash flow/internal financing
    • High/rising profit margins
    • Low debt
  2. Market Leading Position
    • Competitive advantage
  3. Consistent Growth
    • Unit volume increase
    • Fee based business model
    • Recurring revenue
  4. Management Style
    • Cash flow management
    • Process
    • Responsive

Companies

22