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Step 1: Generate Investment Ideas:
Initially Sparrow screens databases Value Line, Zacks, and Reuters for industries and companies that show consistent earnings power over multiple economic cycles.
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Stocks are then scored using a proprietary matrix of various fundamental, quantitative, and technical factors. Some of these factors include:
- Above average earnings per share growth rates
- Above average return on equity
- Excess free cash flow
- Low debt to equity
- Shareholder friendly management
- High margin of safety
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We review the company's original source material such as quarterly and annual reports;
participate in quarterly conference calls and web casts; read independent analyst reports from Value line, Zacks and Reuters; determine intrinsic value, margin of safety and best time to buy based on trading patterns.
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| We sell when the original reason we bought the company no longer exists or when extreme overvaluations occur on a case by case basis. |
RESEARCH SERVICES USED
- Valueline, Reuters, Securities Research Company, and Zacks among others.
- Quarterly and intra-quarterly company webcast conference calls.
- Street Research - Goldman Sachs and others.
- Federal Reserve Data.
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