The fundamental premise on which our investment philosophy is based
is that superior long-term results can be achieved by exploiting
the judgmental biases and behavioral weaknesses that influence the
decisions of many investors. These include: the tendency to extrapolate
the recent past far into the future, to wrongly equate a good company
with a good investment irrespective of price, to ignore or discount
the value of tangible assets, to overemphasize current and projected
LCM uses quantitative computer screens, proprietary financial models,
and qualitative judgments to choose out-of-favor (undervalued) stocks
in the marketplace that we believe have potential for long-term
appreciation. LCM believes that these out-of-favor securities will
produce superior future returns if their future business performance
exceeds the market’s low expectations.
LCM portfolios typically have a deep value orientation. Market timing
is not part of the process.