JWC Investment Research
We believe that high quality, in-depth research has the highest probability of uncovering unique and profitable opportunities. We utilize a top-down research process to identify potential industries that are likely to outperform. Then we utilize a bottom-up research process as well as the scuttlebutt method made popular by Philip Fisher, to identify the strongest companies within the industry with the highest probability of significant upside.
Research Reports
Written Report Includes:
Summary: The goal of the Summary is to present our investment thesis and the catalyst for the recommendation. This section is designed to be presented in a clear and concise manner, and is generally only one page.
Closer Look: Our Closer Look presents the important details that led us to recommend the company as well as what we believe is the fair value. We include: Company Description, Industry Overview, A Quick Look at Operations, Management, JWC Valuation and Risks.
Video Report Includes:
Investment Thesis Video: Our video reports give the highlights of our written reports and are intended to give our clients an introduction to our investment thesis, typically in less than two minutes. We produce these to allow the client to quickly gauge their level of interest in that recommendation.
PWR Investment Thesis Video (2:04)
Our Process
Behind the reports, we utilize both a top down and bottom up analysis. To start, our proprietary quantitative method identifies companies which have the traits that allow us to accurately determine their intrinsic value and are most likely to outperform the S&P 500. The bottom up analysis is then conducted in a systematic review of each company and if it passes our rigorous process, we add that company to our "bullpen". We continuously monitor our bullpen which typically holds between 50 and 100 companies. We carefully watch each company, looking for a catalyst that we believe could materially move the company's stock price.
Once we identify a catalyst, we quickly and efficiently dive into the nuances of the company utilizing traditional research techniques, the scuttlebutt research method, as well as an in-depth financial statement analysis which includes multiple valuation techniques. Our goal is to identify the company's intrinsic value based on its future earnings power.
Sample Report
CalAtlantic Group, Inc. (NYSE: CAA)
Report Date: March 14, 2017
Investment Thesis
In 2015 Ryland Group and Standard Pacific merged to form the CalAtlantic Group (CAA). Today, CAA is the 4th largest home builder (by revenue) in the United States. Herein lies the opportunity: CAA has remained undervalued relative to its not large cap peers. We believe this is due to the street simply not giving CAA the mindshare that companies like Toll Brothers (TOL) and PulteGroup (PHM) receive.
We believe that CAA is a top homebuilder trading at a discounted valuation. We expect investors to gradually realize the mispricing and drive the price higher to our $45 price target. Ever since the merger, CAA has expanded their coverage coast to coast as well as improved their competitive advantage over most smaller homebuilders in negotiations with contractors. We believe this will allow them to maintain a return on equity (ROE) of greater than 14% which calls for a higher multiple than is currently being assigned to CAA. We recommend a buy with a price target of $45.
Initial Recommendation
CalAtlantic Group, Inc. builds single-family attached and detached homes in the United States. The company operates in four regions: North, Southeast, Southwest, and West. They offer crafted homes from entry level to luxury in 41 metropolitan areas spanning 17 states and the District of Columbia. CAA also provides mortgage financing and title examination for homebuyers. The company was formed on October 1, 2015 when Standard Pacific Corp and Ryland Group merged. CalAtlantic Group is headquartered in Irvine, California. CalAtlantic Group Inc. Report - CAA (pdf)
Closed Recommendation
On October 29, 2017 Lennar Cop (LEN) announced it will buy CalAtlantic Group (CAA). We are closing our recommended buy of CalAtlantic Group (CAA). As of 10:30 a.m. on October 30, 2017 CAA is trading at $49.55.
Our Coverage
We are an actionable idea source. We are not your traditional coverage company.
Our unique investment research has the flexibility to seek out the opportunities. Instead of a stagnant list of companies under coverage, our team searches for the industries and ultimately the companies that provide the greatest upside potential.
The JWC Research ratings consist of Buy, Sell and Avoid. Our unique avoid rating serves our clients well. It is primarily utilized when a client requests a company be researched and our findings determine that the company should be avoided. Most of our internally generated reports are buys as we have designed our process to identify the companies with the most potential in the timeliest fashion.
Industries of the Companies that we have published include:
Asset Management, Infrastructure Materials, Infrastructure Contractor, Food Retail, Cloud Services and Digital Media, Building Suppliers, Homebuilders, Brewery, Real Estate Investment Trust, Beauty and Cosmetics, Off-Price Retail, Basic Apparel, Rail-car Manufacturer, and Dealership Technology
