U.S. Equity
Mid Cap Core

Research process

Research culture

It is important to note that we consider research culture to be a critical aspect of the security selection process at Arete. Since we believe that nobody has perfect information, an important function of our research process is to synthesize and interpret the imperfect information we have. We do this by searching for evidence that confirms our hypotheses as well as by searching for evidence that disconfirms our hypotheses. We want to be able to weigh each argument on its merits. We do this by maintaining a “dialogue” by which we challenge various positions from multiple perspectives. The discipline of undergoing an internal “dialogue” serves to ferret out the most realistic hypotheses as well as to minimize the threat of individual bias filtering out or overwhelming available evidence.

Information sources

Our fundamental research effort makes use of a wide range of information sources. These sources include SEC filings, company websites, company presentations, financial models, conversations with company management teams, primary research (when practicable), books, blogs, journals, financial and non-financial newspapers and magazines, independent research, and Wall Street research. We also employ a wide variety of analytical frameworks in our fundamental research including, but not limited to, the traditional Porter analysis. To the extent possible, we try to clarify corporate strategies and priorities by interviewing company management teams and/or investor relations representatives. Although as an emerging firm, we do not have the resources to conduct a great deal of primary research, we do try to emphasize projects for which our effort may have a disproportionately large impact. Finally, we use Wall Street research to access company updates and as a starting point for financial models in order to leverage our internal investment skills. We do not, however, rely on Wall Street research for stock recommendations or target prices.

Masthead photo source: 2005 NASA