We've employed our successful investment process for over 25 years.

Why Scharf Investments?

Successful Investment Process

We have used our unique proprietary Multi-factor Analytical Performance (MAP) screen to consistently identify potential in undervalued stocks for over 25 years. Our performance during down market periods has been the key to our top 1% rate of return, alpha, sharpe ratio and downside capture since the beginning of 1991. During that period, we helped preserve capital by capturing just 54% of the S&P 500's decline during its negative quarters.

Low Valuation Works

We use a proprietary variation of low-valuation investing that we describe as "growth stocks at value prices." Study after study has shown that stocks with low valuation ratios — low price/earnings (P/E), low price/cash flow, low price/book — outperform stocks in general by a wide margin. Many times high P/E's reflect too much optimism about a company's future while low P/E's reflect too much pessimism. Over time, high P/E’s tend to fall and drag the stock price down with them. Low P/E’s tend to rise and carry the stock price higher.

Risk Management Approach

Risk management is an intrinsic, not a supplemental component of our investment process. A stock that is worth $100 and trades for $50 on Monday, $45 on Tuesday and $55 on Wednesday is not risky because it is volatile. A stock that is worth $100 and trades for $150 every day is not safe because it is stable. We believe risk is paying more than the value of the asset. Because value may not be easy to discern and may not be precisely quantifiable, stocks must be purchased with a large margin of safety.

Profit-Based Performance Fee Option

In addition to our standard % of assets fee structure, we offer a performance fee option. The client pays a "keep-the-lights-on" annual fee that declines as a % of the assets as the account grows. We then receive a percentage of the portfolio profits. Should there be a loss in a particular year, the client will not be assessed a performance fee until the portfolio’s value is restored to its previous "high-water mark."

Best Ideas

Portfolios generally consist of 25–35 diversified stocks. Logically, our 25th best stock idea is more likely to provide a more compelling risk/reward proposition than our 100th best idea. We believe owning too many stocks results in "di-worsification," not diversification.

Opportunistic

We look for value everywhere. We are not constrained by style boxes. Our MAP screen is designed to identify stocks meeting our criteria across our investment universe.

Tax Efficiency

There are times when a stock price does not reflect a company's underlying value. Once we have identified such an opportunity and purchased a stock, we are prepared to wait for an eventual convergence between price and value. Our average holding period for an issue is about three to four years, thereby promoting tax efficiency in taxable accounts through the deferral of realized gains.