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Carmel Capital Management identifies companies with specific financial characteristics and possible catalysts to propel future growth and market recognition. Our investment approach consists of fundamental research and quantitative analysis into companies that meet numerous investment characteristics. This process narrows our stock universe to an emphasis list to which we apply extended investment due diligence including conversations and/or meetings with company officers.

The firm seeks to identify strong businesses, gain a thorough understanding of these companies through extensive research, and make investments only when the market presents opportunities for capital growth with limited downside risk. We continuously research and analyze industries and firms we like in the belief that over time an attractive opportunity will present itself. We invest only when we believe the market price is significantly less than the intrinsic value of the company. Firms are evaluated for low absolute, historic, comparable and relative multiple of sales, earnings, cash flow and book value. We compare the company’s fundamentals with those of its closest competitors and also determine the company’s private market valuation.

Our equity evaluation criteria consists of many of the following characteristics:

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Our due diligence process begins with primary sources including annual reports, 10-Ks, 10-Qs, proxy statements, prospectuses and company press releases. We study various trade publications, general business periodicals and newspapers, industry reports, trends and conditions. Once we identify a company that meets our business and valuation criteria, we speak and/or meet with management, the competition, customers, suppliers, and other industry contacts. We continue our investment process by evaluating many qualitative factors including business outlook, competitive environment, barriers to entry, insider ownership, institutional ownership, sell-side coverage and other important issues. We establish direct personal relationships with the company’s senior management, interview them and participate in all company conference calls. We supplement our work with input from our network of investment professionals.

In order to minimize the business or financial risk associated with owning a specific stock, we diversify portfolios and adhere to strict quality criteria in selecting individual equities. We look for companies that are financially sound and adhere to conservative accounting practices. We are in ongoing contact with management.

 

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