Investment Process

We create a watchlist of companies that we believe have enduring franchises. The list is created through management meetings, intensive reading of company filings, media sources and screening. Our screens focus on companies that earn their cost of capital and have grown sales over the last 10 years.

Companies that are attractively valued are further vetted using the Riverwater Three Pillar Approach®.


PILLAR 1: Exceptional management teams.  We focus on teams that exhibit a history of making wise capital allocation decisions and are aligned with shareholders.

PILLAR 2: Superior businesses.  We look for unique businesses with defensible moats allowing them to consistently earn and exceed their cost of capital.

PILLAR 3: Attractive valuations.  Companies should be able to consistently generate or grow free cash flow throughout an economic cycle with flexible balance sheets. We prefer to pay either at or below market multiples on earnings.

Continual Monitoring

After a stock is bought we continuously monitor each holding for changes to the investment thesis, management departures, or deficient capital allocation.  We base our sell decisions on whether there appears to be a breakdown in long-term fundamentals, deterioration of financial position, or a severely extended valuation.

Investment Philosophy

Riverwater Three Pillar Approach®.  Our team-based approach analyzes each investment through our three pillar lens; requiring all holdings to meet each criterion.

Long-term Investing.  We are business owners not stock traders. We strive to hold our investments for the long term. By limiting turnover, we can minimize execution costs, tax inefficiencies and compound after-tax returns.

Focused Portfolio.  We manage focused portfolios that invest between 20-35 names. Studies have shown that focused portfolios generate superior risk-adjusted returns.

Responsible Investment.  It is our goal to ensure your assets are invested for the long-term and given the opportunity to align with businesses that enhance our world for the next generation. We are proud to be members of USSIF and the PRI Association which promote shaping investment practices toward assessing environmental, social, and governance issues (ESG).