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Our Process

"Our core investment discipline is designed to seek out quality companies running great businesses with excellent management teams trading at reasonable prices." - Eric J. Marshall, Co-Chief Investment Officer, Portfolio Manager, & Director of Research


The Hodges investment philosophy revolves around the belief that every company has positives and negatives - we look for both. We take pride in conducting our own in-depth research, often starting at the source through direct contact with management teams. We balance this against objective fundamental analysis to form an investment thesis on a stock. Our team of analysts cover a broad range of industries to gain greater perspective on the particular strengths and weaknesses of various industries. The average tenure of our team of portfolio managers and research analysts is 21 years with the firm.

Collectively, we are following hundreds of companies at any given time. We monitor, analyze, and dissect each one before the appropriate investment decision is made. We dig deep to understand what is really happening with a company's business and then size up how it is currently perceived by the market. Hodges believes successful analysis requires the diligence and skill to uncover the fundamentals, but also the common sense to gauge market psychology.

Our Process

Portfolio Managers

Portfolio Managers & Analysts


Goal: Gather as much information as possible and be able to see risk premiums rotate

  • Analysts are information gatherers for the portfolio managers
  • Analysts are generalists with emphasis on certain sectors
  • Constant communication between the portfolio managers and the analysts is a key ingredient to the process

Idea Generation

Goal: Identify companies where market perception may be different from reality

  • Conversations with company management teams
  • Discovery while doing research on other companies within the coverage universe
  • Travel, company visits, and conferences
  • Sourcing ideas is a responsibility of both the portfolio managers and analysts


Idea Generation
Conviction Through Analysis

Conviction Through Analysis


Goal: Identify a company with unrecognized growth prospects and/or misunderstood value

  • Develop an understanding of key investment merits by visiting with management, customers, vendors, competitors, and various industry sources
  • Each company is evaluated independently
  • Identify a catalyst that will likely unlock hidden or intrinsic value
  • Develop a theoretical upside and downside and weigh risk/reward

Buy & Sell Decisions


Goal: Avoid group think, make timely decisions, and constantly own companies with attractive upside potential

  • Constant evaluation of the upside potential relative to downside risk
  • Weightings based on level of conviction, beta, potential downside protection, and catalyst events
  • Sell when the risk/reward proposition is no longer attractive
  • May opportunistically reduce position size when the stock price makes a quick run
  • Use cash opportunistically and add to names in which we have a continued conviction


Buy and Sell
Portfolio Construction

Portfolio Construction


Goal: Take advantage of periods of inefficiency within a sector or the asset class

  • Concentrate the number of holdings in the portfolio during a market pull back
  • Concentrate the number of holdings in the portfolio within a certain sector during a sector pull back
  • Attempt to spread out risk during frothier markets by adding to the number of holdings
  • Entirely focused on security selection and indifferent to benchmark sector allocations



"The Hodges investment team is constantly evaluating the upside potential relative to downside risk. We believe that evaluating the intrinsic value of a business potentially limits downside risk"

Eric J. Marshall - Co-Chief Investment Officer, Portfolio Manager, & Director of Research


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