The North Star Process – Micro to Macro Investing
While our focus is on overlooked small- and micro-cap companies, the North Star Mutual Funds actively invest in undervalued companies of all sizes. When considering an investment, we look for opportunities that meet at least four of the six criteria:
1. Statistically Undervalued
The stock trades at a discount to public comparables, private market multiples, and our internally established expected value calculations.
2. Defendable Business Model
The business has been through at least one business cycle.
3. High-Quality Balance Sheet
A balance sheet to withstand economic cycles with a bias toward no to low leverage.
4. Improving Business Prospects
The business’ mid-term prospects are improving due to specific or general reasons.
5. Advantageous Ownership
Company management has a vested interest in the successes of the shareholders.
6. Simple Business
We can understand and assess the risks inherent in the business model.