How Do We Think About Companies? The Importance of Fundamental Analysis

There are numerous ways of investing your wealth in the markets. At Bradley, Foster & Sargent (BFS), our investment philosophy is rooted in the belief that understanding the companies we own is crucial, not just for us, but for our clients as well. This is why we prioritize investing in individual securities, both equities and bonds. We want to ensure that our clients have full transparency and know exactly what they own. As we celebrate our 30th anniversary at BFS, this milestone marks three decades of dedicated service and significant accomplishments, with our commitment to deep understanding and client-focused service remaining at the heart of our approach.

Our approach is rooted in fundamental analysis, which involves analyzing a company’s business model, examining operations and management’s capabilities, dissecting financials and assessing industry positioning. The reason we do this goes back to how we think about companies. We believe that companies that can stand the test of time are those that compound solid returns over long time horizons and through different economic environments. Our deep dives enable us to identify those best-of-breed companies with strong competitive advantages, good growth prospects, and excellent free cash flow generation. Fundamental analysis is an essential part of separating the mediocre from the high-quality companies when constructing a portfolio and managing an individual’s wealth.

Our deep understanding of companies enables us to invest in individual securities, that is, we know what we want to own and what we do not want to own. Each client has full transparency into what he/she owns, and each portfolio manager has the capability to explain why we own each position. Every portfolio is built to meet the client’s investment objectives as well as his/her financial and life goals, something that is not as easily achievable with exchange-traded funds (ETFs) and mutual funds.

Values-based investing is increasingly important to our clients, who want their portfolios to align with their beliefs. We can customize client portfolios to reflect individual values, such as avoiding/favoring certain industries and companies. Investments in ETFs and mutual funds are less flexible when it comes to customization. In addition, owning values-based funds reflects the values of the fund and not the individual investor. Our philosophy is that each client should be able to invest according to their value system, and our individual securities approach enables that.

At BFS, we seek to connect with our clients and understand their life and financial goals. Every client, whether new to investing or experienced, has the key question at the heart of their concerns: “Will I be okay?”  They want to know if they can retire comfortably, afford their child’s education, or achieve other personal milestones. We go beyond managing money to offering comprehensive financial advice, helping clients with everything from starting a Roth IRA to planning for college. In other words, we are not just managing your wealth, we are incorporating a full view of clients’ circumstances, financial situations, needs and wants into our discussions and decision-making.

In the end, our investment strategy is about knowing what you own. This philosophy guides everything we do, from the rigorous analysis of each company to the personalized portfolios we create. Investing is not just about returns; it is about making informed decisions that align with your values and goals, helping you achieve your dreams.