Investment Philosophy

An Aggressive Philosophy

Driehaus Capital Management LLC is committed to aggressive growth investing. We consistently focus on companies that we believe have strong growth prospects, and seek to take maximum advantage of opportunities that arise in a dynamic market environment.

Although our process involves much discipline, we believe it is, by design, flexible enough to react to changing market conditions. We do not mimic any external index or benchmark, nor are we restricted by strict price/earnings multiple constraints. We do, however, believe that things in motion tend to stay in motion — so we place our primary focus on the growth and quality of earnings.

Insistence on Earnings Growth

Earnings growth is considered to be the principal factor in determining common stock prices over the long term. Only through sustained earnings growth can cash flows be expanded, dividends raised, and book values increased. For this reason, we use accelerating sales and earnings growth rates, strong earnings momentum, and positive earnings surprises as our fundamental criteria for selecting common stocks — along with high earnings quality and market timeliness.

We apply this standard to all securities under consideration: large, mid or small cap, domestic or international. While our basic investing philosophy remains consistent, our implementation may change based on country, market conditions, economic cycle and other similar factors. For example, foreign stocks require additional analysis of such criteria as market direction, market liquidity and currency strength and weakness.

A Focus on Fundamentals

We follow a "bottom-up" approach when investing. We evaluate the fundamental elements of a company's financial condition — such as earnings and revenue growth rates — in determining whether to buy or sell a company's stock.

In making buy/sell decisions, our portfolio managers work closely with our in-house research analysts, who continually monitor the investment environment for economic, political and social developments. We also consider behavioral economics in our decision-making process. This way, we can be ready to respond quickly to significant changes. We believe this approach allows Driehaus Capital Management LLC to identify attractive stocks before other firms have fully evaluated their earnings and stock price potential.

Technical Consideration

We also determine the technical positions of each security. Data from numerous sources is used to determine price support levels, volume characteristics and relative strength rankings. Sector and industry relative strength are also monitored. By emphasizing the recognition of both favorable corporate developments and technical indicators such as increasing volume, we seek to make early identification of companies on the threshold of rapid stock price appreciation.