We are a fundamental-research, employee-owned investment firm. We invest using a thorough in-house research process - free from sell-side research and the herd mentality. Our thinking is independent of the investment community and our opinions often differ greatly from the consensus.
Because we are not engaged in investment banking, brokerage and prop trading (nostro activities), we have no conflicts of interest to cloud our judgment. Ours is truly an independent investment firm.
Based on our independent research, we make investments where there is significant under-valuation or where there are realistic and meaningful opportunities for growth at reasonable prices. Our main focus is on small-cap companies because we believe that market inefficiencies often occur in the valuation of small, harder to find, and lesser-known companies.
Our investment philosophy, based on independent thinking and a record of strong performance, has built Forest into a firm that has grown primarily through referrals.
The beliefs behind our Investment Approach
Ultimately, stock/bond prices reflect the company's real value
We believe that despite short-term market fluctuation, cash flow, revenue and the intrinsic value of companies ultimately drive stock prices in the long run.
Greater market inefficiencies exist among smaller companies
Its rare to find a small cap company that is covered by sell-side analysts. That's ideal for us - inefficiencies almost always occur in over looked companies. An average TA25 company is covered by dozens of analysts - we don't spend time competing with them.
Fundamental and disciplined analysis leads to better investments
Our research is for the exclusive benefit of our investors. As part of our ongoing research on companies, we maintain communication with company managements and controlling shareholders. We visit them on a regular basis to further our insight into the company's performance.
Active minority approach is a must
Research is most important but not enough. Payments to managements and controlling shareholders must be constantly checked and when they exceed a reasonable level we act firmly. As we see it, the equation is clear and simple: the higher management costs are - the smaller the EPS gets.
We do not engage in brokerage services
We receive no compensation from trading activity. Hence, the only reason to buy or sell a security is based on valuation.
We do not engage in underwriting (Investment Banking)
We wholeheartedly disapprove of underwriting given the context. In fact, we are often amazed that asset managers are permitted by law to practice in such a clear case of conflict of interests.
We do not engage in prop trading (nostro activities)
Forest's own capital is invested only in our funds and in cash. We do not hold securities directly. The logic is simple: what's good enough for our investors is good enough for us. If we find an outstanding investment opportunity we buy it to our funds.
All our funds are closed to new investors once they reach specific size
We close a fund to new investors when we feel size is interrupting with investment quality.