Mr. Sido: Harris Investments is a wholly-owned subsidiary that's ultimately owned by the Bank of Montreal. We are a SEC registered investment advisor and have been in business approximately 20 years. Our firm has $13 billion in AUM and offer equities, fixed income and cash investment services.
As an equity group, we are a quantitatively based firm. The key to our investment results has been our disciplined, consistent, repeatable process that strips the emotions from the investment decision. By looking at facts and having a disciplined way to assess them, we feel it removes fleeting opinions of the markets and relies on something far more reliable, facts.
Our time proven investment philosophy looks at three investment concepts; attractive valuations, we seek companies that are inexpensive relative to their peers, improving fundamentals, we want companies that are growing faster and finally we look for issues with increasing investor's interest, which are companies that are in the early stages of being recognized by other investors.
TWST: This has been a difficult year for you and I'm sure for your clients. How did your investment process and philosophy cope with the dramatic events and the turmoil in the markets over the last 12 months?
Mr. Sido: Our philosophy consistently seeks companies that are attractively valued, demonstrating improving fundamentals and has increasing investor interest. The combination of those three has been key to our long-term success.
2009 performance can be divided into pre-March 9th and post-March 9th. In the pre-March 9th environment, our process performed well, consistently identifying winners and generating excess return to the benchmark for our clients. The challenging part in the post-March 9th environment is the markets observed a rapid, sizeable sentiment change. Many of the lower quality names in the market, those with unattractive fundamentals, many with low or negative earnings growth and low or negative return on equity's and those who lacked other investor interest, such as those issues selling at very low price per shares rebounded quite sharply. When these periods of rapid sentiment change occurs, the markets can in the short-term fail to reward companies that our investment philosophy seeks.
We firmly believe in our time-proven investment philosophy and felt the short-term performance trend of low-quality issues outperforming in the market was not sustainable. It has been somewhat of a challenging second half of the year, but on a year-to-date performance basis, we are at or near the benchmark for performance.
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