Qualitative analysis uses subjective judgment pertaining to non-measurable information such as management, labor relations, industry and economic cycles. Our analysts look at a company’s ownership and governance, management and incentive structures, employee turnover, R&D, competitive strengths and weaknesses, and accounting policies, among other things. We look for instances where a qualitative issue, such as the implementation of a new growth strategy, may not yet be reflected in the price of the stock.
We then delve deeper, looking for divisions that might be profitably spun off or divisions that are underperforming and dampening the overall financials. We compare it to other companies in the same industry with a similar outlook to see if the market is pricing them the same or differently, for no discernible reason. We also look to see where there are inefficiencies in the global pricing of corporate assets. Understanding differences in accounting and valuation can help to uncover very attractive opportunities in different markets.
