The Poplar Forest Partners Fund investment objective is long-term growth of capital. The Fund seeks to deliver superior, risk-adjusted returns over full market cycles. The Fund will generally focus on 25-35 companies with (i) an investment grade debt rating, (ii) a history of paying common stock dividends, and (iii) a market capitalization among the top 1,000 companies in the United States. We focus on three types of investment opportunities we consider our “sweet spot”: (i) out-of-favor, under-earning companies with opportunities for recovery, (ii) discounted “cash cow” companies trading at a discount, and (iii) underappreciated quality businesses taking market share in a growing industry.
Management uses a long-term approach to security selection. Investments will generally be made with an investment horizon of three years, although individual investments may be held for shorter or longer time periods. The Poplar Forest investment team evaluates investment opportunities using bottom-up fundamental analysis, paying particular attention to the following factors:
- Expected future profits;
- Expected sustainable revenue and/or asset growth;
- Expected cash investment needed to support expected growth;
- Normalized free cash flow after considering the items above; and
- Valuation relative to normalized earnings and free cash flow after giving consideration to growth potential and financial strength