Our investment approach consists of combining three analytical methods to add depth and insight to conventional analysis and provide a more thorough analysis of market conditions and individual stocks. We call this proprietary methodology the Three-Pillar Approach™.
Enhancing Fundamental Analysis…
Conventional fundamental analysis uses a sequential model to determine a stock target price through information gathering, study and assessment, scenario forecasting, and projections. In this model, over time, the incremental value added decreases while the level of uncertainty and the influence of cognitive biases increase.
… with Three-Pillar Approach™
Triasima’s approach makes conventional fundamental analysis one of the three pillars of a comprehensive investment system. The system brings together fundamental, quantitative, and trend analyses in a process of checks and balances, with each pillar reinforcing the other two.
How it works
In the Triasima Three-Pillar Approach, the outcomes of the three analytical methods are combined to arrive at individual decisions. Each pillar assigns to a stock a ranking from -2 to +2, generating an overall ranking from the three pillars from -6 to +6. The process is holistic and each pillar is independent. The aggregate results from the three pillars will determine whether a security is a buy, hold, or sell. Generally, two of the three methods must have a positive conclusion, while the third may be positive or neutral.
The three pillars
Securities are identified using a combination of primarily qualitative top-down and bottom-up considerations. Overall, sector allocation – and, to some extent, security selection – is driven by a blend of top-down and bottom-up analysis. Triasima also evaluates prospective and existing investments with a focus on four key areas: Business and Operations, Historical Performance, Management and Culture, and Sustainability and Growth.
Triasima uses computer data banks and sophisticated software to screen and grade attractive securities. In its search for factors that enhance value in a securities portfolio, Triasima has identified specific financial ratios, attributes and other parameters, which it divides into five categories: value, growth, profitability, outlook, and risk. The use of quantitative analysis allows Triasima to build portfolios that combine elements of the Value, Growth, and Momentum styles and exhibit superior characteristics compared to their respective benchmarks.
Triasima uses a range of technical indicators to monitor securities and assess their current market behaviour and trend. The objective, within a portfolio, is to give priority to securities that are trending up or outperforming the market and avoid those that are trending down or underperforming the market. The technical indicators are divided into three groups based on time horizon (short, medium, and long). The short-term horizon is approximately six months, while the long-term horizon is two to three years.
and risk management
By managing risk on three levels, we are able to effectively implement superior risk control and manage the risk and return characteristics of our portfolios.
- The portfolio is diversified by holding limited range of securities specific to each strategy.
- Deteriorating names are systematically reduced in several transactions while important positions are reduced when they reach a certain percentage of the portfolio.
- Allowed sector weightings are determined according to a sliding scale based on the importance of each sector in the benchmark index.
- The quantitative pillar is used to monitor and manage various parameters, categorized along five axes: value, growth, profitability, expectations, and risk.
- Monitor statistical factors such as alpha, beta, correlation, and standard deviation with the aim of having risk/return characteristics that are superior to those of the benchmark index.