A Peak Inside Our Investment Strategy

Going behind the scenes with Bank Credit Analyst (BCA), a leading market research firm

This quarter we go behind the scenes with Bank Credit Analyst (BCA), a leading market research firm

It seems clear from our communications with clients that they want to know just how we measure and evaluate the environmental, social, and corporate governance impact of the investments we consider for their portfolios. Although this aspect carries a lot of weight, we would not want to imply that fundamental and technical analysis are any less significant.

Quite simply, investments that find their way onto the Portola Creek buy list need to have all the boxes checked. In an effort to explore the aspects of our assessment that extend beyond our emphasis on ESG fundamentals, we are taking this opportunity to introduce one of our important research and data providers, Bank Credit Analyst (BCA).

BCA is a highly-respected global research firm based in Montreal, Canada. BCA's Equity Trading Strategy Service (ETS) combines a top down-approach with a 26-factor proprietary model to deliver a solution oriented toward understanding, analyzing, and extracting alpha from global equity markets. Leveraging BCA’s technology to perform these tasks enables our investment committee to make timely decisions with greater confidence. In general, ETS builds on BCA's global macroeconomic thematic research, adding sector and quantitative analytics in a consistent framework that connects the dots from analysis to actionable investment conclusions. By way of the ETS model, BCA ranks and scores individual equities and applies macro and sector views to single-name investments, helping to enhance the value of our investment approach.

In our view, one of the model’s most interesting features is its adaptive capabilities. The weighting of the 26 factors changes dynamically, based on which ones look to be most relevant to stock-price movements in real time. Overall, we have found that the combination of fundamental and technical analysis with ESG scores has been the “secret sauce” that is central to our investment process, helping to promulgate consistent outperformance for our clients over time and across portfolios.