We’re skeptical investors. We avoid the herd mentality of financial markets. Instead, Dolan McEniry keeps its attention on one thing, the right thing: the analysis of free cash flow.
We think that lending money to companies over the long term is better than trading pieces of paper in the short run. That’s why we seek companies with proven records for generating strong levels of free cash flow. Not EBITDA, but good old-fashioned, end of the day, bottom line, after capital requirements free cash flow. After all, isn’t it cash flow that pays interest and principal?
That’s why we like businesses with leading brands and market shares. Businesses with free cash flow are more likely to be around next year, and future cash flows are more easily predicated. This disciplined cash flow analysis has allowed us to avoid credit problems over the course of our history.
Our credit analysis protects us on the downside, so we can purchase bonds that trade at relatively wide spreads to treasuries. The client portfolios we construct enjoy attractive yield premiums to our benchmark—and this has helped deliver above market returns.