Systematic Financial Management

About

About

Founded in 1982, Systematic Financial Management offers equity strategies that span the market capitalization spectrum. The Firm aims to pursue value at the right time with an awareness of investor and market psychology. Systematic's investment approach unifies attributes of quantitative screening and fundamental research in an integrated, robust and repeatable process that combines elements of value and momentum investing.

Approach & Philosophy

Philosophy and Approach

Our Philosophy

Systematic’s investment philosophy is predicated on certain beliefs about investor and market behavior: stock prices ultimately reflect changing consensus earnings estimates; investors are slow to react to a company’s changing pattern of earnings—skepticism occurs on initial improvements and disappointments; out-of-favor, undervalued companies have investment potential only when their fundamentals experience stronger improvement than market consensus.

Our Approach

Systematic’s process has been honed over the last 30+ years to help them pursue value at the right time. Systematic seeks to identify attractively valued companies already exhibiting evidence of a sustainable and fundamental turnaround before other investors recognize this shift and adjust their earnings expectations.

  • IDENTIFY—VALUATION AND EARNINGS CATALYST SCREENING: Valuation screen analyzes sector specific valuation factors such as Price/Earnings, Price/Book, Price/Sales, Price/Cash Flow, Dividend Yield, EV/EBITDA. Proprietary earnings catalyst model (1) Investor expectations—predicts earnings surprise trends, future estimate revisions (2) Income statement—identifies increasing revenue and improving margins (3) Balance sheet—seeks to identify aggressive and/or fraudulent accounting practices
  • VALIDATE—FUNDAMENTAL RESEARCH: Identify current investor expectations to isolate companies where expectations might be misplaced. Analyze financial statements to determine what is driving fundamental improvement and whether it is sustainable and cash flow growth is commensurate with earnings. Assess a company’s valuation relative to its history, peer group and benchmark to determine whether the stock is truly undervalued
  • SELECT—BUY DECISION: Portfolio managers validate investment thesis and make final decision on whether to include the stock and the timing of the purchase
  • MONITOR—PORTFOLIO: Continuously monitor portfolio holdings daily to anticipate companies no longer meeting expectations. Investment team will typically sell a stock when: (1) Earnings outlook deteriorates (2) Valuation is too high or expands (3) Significant negative earnings surprise occurs (4) Stock quantitative score degrades (5) Other more attractive opportunities exist (6) Market capitalization grows beyond range

Fund Managers

Fund Managers

D. Kevin McCreesh, CFA

D. Kevin McCreesh, CFA

Managing Partner and Chief Investment Officer

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Ronald M. Mushock, CFA

Ronald M. Mushock, CFA

Managing Partner

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Aman Patel, CFA

Aman Patel, CFA

Partner

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