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Investment Process

Turtle Creek Equity Fund’s portfolio consists of approximately 25 companies. Our process for achieving strong returns is described below.

  1. Investable Universe

    • Turtle Creek’s investable universe is comprised of approximately 400 non-resource TSX-listed companies with market capitalizations of between $100 million and $10 billion. From this, we construct a short list of approximately 50 companies that we follow.

  2. Bottom-up Stock Selection drives portfolio construction

    • We look for good fundamentals in our companies
      • Strong cash flows
      • Management team enfranchisement
      • Strong market opportunities
    • Highly intelligent organizations
    • Integrity of management and board-alignment
    • Either global in operations or very strong domestic franchise
    • Ideally, hard for investors to understand or “misunderstood”

  3. Portfolio Construction

    • Portfolio positions are added, increased/decreased and removed on the basis of a proprietary scoring system we call “Turtles”
    • The core driver of the Turtles is the difference between the intrinsic value and price
    • The Turtles are adjusted by various quantitative and qualitative factors including
      • context
      • quality management
      • alignment
      • relative risk assessment

  4. Position Reweighting

    • Although the average holding period of a typical company extends over years, the size of the position is seldom fixed month-over-month, in our Funds. Anchored on intrinsic value, we flex our ownership based on how attractively a position is priced.