We seek to preserve capital in a down market.

Product Overview

Scharf Investments' objective is to add measurable value to client accounts over the course of a market cycle. We attempt to achieve this goal by tracking relevant benchmarks in rising markets and losing less than benchmarks in falling markets.

Our performance during down market periods has been the key to our top 1% rate of return, alpha, sharpe ratio and downside capture since the beginning of 1991. During that period, we helped preserve capital by capturing just 54% of the S&P 500's decline during its negative quarters.

We use a proprietary variation of low-valuation investing that we describe as "growth stocks at value prices" to construct a portfolio of 25–35 stocks with the capacity for predictable earnings. Our approach is style box agnostic; we select securities of various market caps, styles and, to a lesser extent, countries*. However, our predilection for earning predictability and mitigation of downside risk generally results in a portfolio with a mid-large cap, US-domiciled bias.

Our Multi-factor Analytical Performance (MAP) screen identifies stocks that we believe have appreciation potential of at least 30–40% over the next 12–24 months due to the exponential interaction of improved valuations applied to rising per share earnings, cash flow and/or book value. Integral to the strategy is risk management. We build and monitor Favorability Ratios — upside potential/downside risk — for each stock and seek to provide diversification by limiting exposure to individual stocks and industries. Many advisors and clients hire us as a large cap core or relative value manager. Some clients hire us as an all-cap manager.

* Non-U.S. domiciled stocks tend be ADRs and multi-nationals. We generally limit our exposure to international stocks to 0–25% of the portfolio.