Process
Let the market change.
The market will change. The fundamentals should not. Beese Fulmer Quality investing principles never waver. Beese Fulmer's BF Quality Score indexes companies along a 4-point process:
1
Step 1
Factor-Ranking + Other Candidates
Screens for profitability, predictable growth, and capital allocation. The 60th percentile and above get a wide-ranging review.
2
Step 2
Fundamental Quality Vetting
Determines what drives growth and how capital allocation decisions change from a historical baseline to a 3- to 5-year estimation.
3
Step 3
Valuation
Compares a discounted cash flow analysis to historical ranges, the company’s peers, and the market as a whole.
4
Step 4
Portfolio Management Review
Reviews the company’s dedication to compounding value over time along with its risk.
A sample of quantitative portfolio measures.
Capital Allocation
- 3-year avg. of Cash Flow ROI
- Current dividend yield
- Years of increased dividends out of last 10 years
- Share count change over last 4 quarters
Profitability
- Last 3-year EBIT margin average
- Current year consensus
Predictable Growth
- 5-year growth of: EBIT, Net Income, and Free Cash Flow
- Sell-side long-term EPS growth rate
A view of the Beese Fulmer investment process.
| INVESTMENT UNIVERSE ~ 3,500 Securities |
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| Factor Rankings + Other Candidates ~ 450 Securities |
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| Fundamental Quality Vetting Profitability | Predictable Growth | Capital Allocation ~ 125 Securities |
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| Valuation ~ 75 Securities |
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| Portfolio Management Review Conviction | Risk | Liquidity ~ 50 Securities |
Final Portfolio =
A collaborative, investment committee approach.
Beese Fulmer uses weekly reviews of the portfolio and coverage areas, when analysts present recommendations to the investment committee. Each focuses on the largest 25-50 companies in its sector, with decisions approved by Portfolio Managers. The team confirms:
- Competitive leadership in its industry
- Sustainable earnings growth
- Predictable growth in sales, free cash flows, and margins
- Capital allocation that supports higher ROIC and ROA
- Higher shareholder returns through share repurchases and dividends
- Strong and flexible balance sheets
The portfolio construction follows a bottom-up security selection process.
The process considers tax sensitivities, minimizing liabilities with holding periods of over 5 years. Combined with approximately 10% portfolio yearly turnover per year, fewer taxable events are spread out over longer periods of time.
Individual Securities
- 40 to 60 individual securities (historical avg. ~50)
- Initial allocation 1.5–3%
- Maximum allocation 5%
- Cash to cover inflows/outflows in max. range 0–10% (realized target >1%)
- Target holding period +5 yrs.
- Portfolio can hold ADRs (max. 10%)
- Turnover ~10-20% per year
Sector
- >10% can be weighted 0.5x-2.5x the benchmark weights
- <10% can have 0%-3x the benchmark weight