Tuesday, February 01, 2000

Investment Strategy

Investment Strategy

Identify and invest in companies that consistently create “economic value added” (EVA) for their shareholders. EVA is measured by determining a company’s cost of capital and comparing it with annual return on investment (ROI) generated by the company’s net operating profit.

Value-creating companies frequently also have high market valuations. Therefore, we also perform intrinsic value analysis on the companies we follow to determine which are the best investments.

We do this by studying long-term earnings expectations and projecting cash requirements (for capital expenditures, working capital etc.) to determine likely free cash flows over time.

We then calculate the present value of these free cash flows to determine the intrinsic value of each company.

Strategy is to seek out and invest in economic value-creating companies that are reasonably priced relative to their intrinsic values.

- Quality and Consistency are the watchwords of successful long-term investing.

- Own EVA stocks consistently.

Saturday, January 01, 2000

Meet Jack and Peter Falker

Professional Qualifications

- Primary research and investment officer of FalkerInvestments Inc.

- Securities market experience includes:
Farallon Fixed Income Associates (now Bracebridge Capital), Boston, Mass.
Mitchell Hutchins Asset Management, a unit of Paine Webber Inc., New York, N.Y.
Internship positions with U.S. Bank Piper Jaffray and Dain Rauscher Wessels Inc.

- Graduate of the University of St. Thomas with a BA in Economics, 1995.

- Graduate of St. Thomas Academy, 1991.

- Has earned the right to use the Chartered Financial Analyst designation.

* EVA is a registered trademark of Stern Stewart & Co.

John R. (Jack) Falker

- Primary operating officer of FalkerInvestments Inc.

- Active in the practice and teaching of corporate finance for more than 40 years.

- Formed FalkerInvestments after leaving Swenson/Falker Associates, the financial relations firm he co-founded in 1987.

- Corporate treasurer in two Fortune 500 companies.

- Taught applied cost of capital theory and shareholder value maximization to finance majors at the graduate level for many years.

- Advocate of the concepts set forth in the “Quest for Value,” Bennett Stewart’s book which revitalized applied cost of capital theory and set in motion the current attention being paid by corporate managers to the EVA* concept.

- Graduate of the University of Michigan and the University of Detroit with an MBA in Corporate Finance and a BA in English Language & Literature.