Channing Capital Management

Process

Our investment process is disciplined and focused, and designed to help us identify investment ideas early — before they are widely recognized in the marketplace.

It begins with a team that combines more than 50 years of experience with deep sector- and industry-specific knowledge.

Then, using a proprietary, fundamental process, our team seeks misunderstood and overlooked small- and mid-cap opportunities. Companies whose stock prices are trading at significant discounts to their intrinsic value often have either weak operations or are in industries that have experienced prolonged weak performance. The ideal opportunities are presented when the best of those companies are poised for improved and sustainable performance.

Step 1: Universe

Our universe of investment ideas is generated both from the team’s deep knowledge of specific companies and through a proprietary screening process, then evaluated on time-proven valuation criteria.

Step 2: Opportunity Pool

We look for companies with a combination of these characteristics:

  • Capable management
  • Enduring business franchises
  • High or improving returns on invested capital
  • Solid financials
  • Discounts relative to intrinsic value

To maintain our in-depth understanding of the companies in which we invest, we are in regular contact with the management teams.

Step 3:  Portfolio Construction

Portfolios are constructed on a stock-by-stock basis, with careful consideration of the return potential for each individual security. As a boutique firm investing in a relatively small number of companies at any one time, we are able to opportunistically capture alpha through stock selection.

And intentional sector and industry diversification is used as a risk management tool.

Step 4: Continuous Review

Our process is disciplined, yet dynamic. We regularly review and modify our portfolios, as needed, to maintain a roster of quality investments at attractive valuations.