One Equity Investment Philosophy

The cornerstone of our equity investment philosophy, developed more than thirty years ago, is that company specific earnings growth is the primary driver of stock prices over the long-term. We look to exploit specific inefficiencies using a bottom-up fundamental approach, while also factoring in the top-down macroeconomic environment. With new and often rapidly changing political and economic developments in the global markets, including the emerging markets, that may result in instability, inflation or deflation and currency devaluations, macroeconomic analysis may have a more significant role in implementing our Equity Strategies.

In addition to fundamental analysis, macroeconomic, demographic and geopolitical factors are evaluated in context of fundamentals and sustainability and security timeliness.  Further technical analysis on a company’s stock, its sector and sub-industry group, and other factors (country, region, currency) relevant to our investment thesis are also conducted. Utilizing fundamental analysis to assess earnings power and technical analysis to assess investor sentiment, we seek to invest in stocks of companies that will produce future earnings upside. We believe that the most attractive companies in which to invest are those experiencing positive changes in their revenue and earnings growth rates. If proved to be sustainable, these companies hold potential for upward earnings-per-share revisions and positive earnings announcement surprises, which in turn offer superior capital appreciation potential through earnings growth and price-to-earnings multiple expansion. We believe that the application of technical analysis is essential in order to identify timely investments (i.e., stocks that offer superior price appreciation potential) in attractive companies. We also believe change is constantly occurring in the equity markets. Therefore, it is crucial to respond quickly to change in order to capture returns associated with attractive investment opportunities.

Unconstrained Approach to Create Alpha

All of the Firm's Equity Strategies are focused on an aggressive growth style of investing. The Equity Strategies are benchmark-aware, but not benchmark-constrained; we believe that maintaining a flexible, opportunistic approach to managing money while maintaining style consistency is essential to achieving long-term outperformance. Our decision-making process promotes timely and nimble conviction-based, "best ideas" investing. We are dedicated to our investment philosophy and consistently adhere to its overall objectives.

One Credit Investment Philosophy

Our Credit Strategies are based on the belief that pricing anomalies exist in the credit markets that can be exploited through a disciplined, relative value approach to portfolio management. We believe that attractive returns with modest volatility can be generated by employing a combination of sophisticated investment strategies in different interest rate, credit and volatility environments. These strategies are broadly defined as relative value and directional, and focus on liquid credit instruments. Liquidity is critical in managing modest volatility, which also allows us to be tactical, and when combined with risk management can limit large draw downs. The application of in-depth, fundamental research is paramount in selecting the best investment opportunities.

Absolute Return Focus

We actively short individual securities which should make a cleaner hedge (relative to shorting a bond or credit index) and a more defined risk exposure which we believe enhance the value-add of the trade. Further, we opportunistically employ the following investment techniques:

• Capital Structure Arbitrage, where the Strategies attempt to exploit a pricing inefficiency between two securities of the same company. Often times, the Strategies may buy a debt instrument that it believes is undervalued, while simultaneously shorting a subordinated debt instrument of the same issuer that is believed to be overvalued.
  

• Convertible Arbitrage, where the Strategies attempt to profit from changes in a company's equity volatility or credit quality by purchasing a convertible bond and simultaneously shorting the same issuer's common stock.

• Directional Trading, where the Strategies take long or short positions in equity or corporate debt instruments in anticipation of profiting from movements in the prices of these assets.

• Event Driven, where the Strategies invest in positions intending to profit from the consummation of a given event, e.g. a takeover, merger, reorganization or conclusion of material litigation, or based upon the perceptions of a potential pending corporate event.

• Pairs Trading, where the Strategies seek to exploit pricing inefficiencies between the securities of two similar companies by buying the security of one company and shorting the security of the other. In these trades, the Strategies anticipate the relationship between these securities will diverge or converge to an expected level where it may profit from the long and short positions.