Equity Research

At Odlum Brown, we believe that investment wealth is created by buying and holding shares of high-quality companies for the long term. A stock represents an ownership position in a business. Accordingly, we think like business owners and recommend shares in businesses that we would like to own ourselves. We pay particular attention to valuation, as stocks purchased at attractive prices provide a margin of safety and superior long-term return potential.

Our investment approach is value-based, disciplined and sometimes contrarian. We conduct our own due diligence on potential investments and often challenge conventional wisdom. We are prepared to think differently than the crowd and firmly believe that one has to act differently than the average investor to achieve above average results.

Individual Investors Come First. Odlum Brown’s business is focused on serving individual investors. We do not have a proprietary trading desk that carries an inventory of equities and trades against client orders, nor do we have a corporate underwriting department. Without the potential conflicts of interest that exist at other financial institutions, our analysts feel they are able to be completely objective when formulating opinions. In fact, our analysts are motivated by Odlum Brown’s singular goal of helping individual investors achieve financial success. Our analysts succeed when clients prosper.

Simple, Easy to Understand Research. Given that Odlum Brown caters to individual investors, we aim to produce research that is jargon-free and easy to understand. In fact, we firmly believe that a good investment thesis is clear and simple, regardless of whether the target audience is a sophisticated portfolio manager or a novice investor.

Our Analysts are Encouraged to Own Their Recommendations. We recommend securities that we would like to own ourselves. Our analysts are encouraged to own shares in the companies they recommend—a somewhat unique position in the investment industry. While we have policies to ensure clients’ interests are always served first, we believe this approach appropriately aligns our interests with the interests of our clients. We also believe this yields better decisions and higher quality investment recommendations.

Timely and Equitable Research Dissemination. Odlum Brown endeavors to ensure that all clients receive research in a timely manner. Research reports are available to our clients either electronically or in printed form. We publish our reports to our Client Centre web site when they are issued. Our research reports are available for two years from publication. Please contact your Investment Advisor or Portfolio Manager to make sure you get the reports you want, when you want them, in the format that best suits your needs.

Research Ratings. Odlum Brown's target prices are set based on a 12-month investment horizon and our reports use three ratings:

• BUY: when the stock is recommended for client accounts.
• HOLD: when we want time to process new information; we are no longer comfortable with a BUY rating; or when we are waiting for a better time to SELL.
• SELL: when we downgrade from BUY or HOLD and discontinue coverage.

The following table highlights the percentage of current recommendations in each rating category.

Recommendations by category are updated monthly. Because we do not continue active coverage of Sell-rated securities, the percentage is always zero. Typically, once we issue a Sell recommendation we discontinue coverage.

The Odlum Brown Model Portfolio provides a basis with which to measure the quality of our advice and the effectiveness of our disciplined investment strategy. This hypothetical, all-equity portfolio was established in December 1994 and typically has 40-50 stock positions. It is well diversified across economic sectors, with an emphasis on high quality companies that have sustainable competitive advantages, conservative financial leverage and strong management. The Model holds foreign securities when good value or ample diversification is difficult to find in Canada.

The objective of the Odlum Brown Model Portfolio is to beat the performance of the Canadian benchmark stock index, the S&P/TSX Total Return Composite, while limiting risk and preserving capital.

As highlighted in the chart, the Odlum Brown Model Portfolio has achieved notable success since its inception.

For additional information on the Odlum Brown Model Portfolio, feel free to speak with an Odlum Brown Investment Advisor or Portfolio Manager.

¹ As of February 15, 2023. The Odlum Brown Model Portfolio is a hypothetical, all-equity portfolio. Performance is measured without the consideration of fees. Trades in the Model are made using the closing price on the day a change is announced. Past performance is not indicative of future performance. It is also important to note that a well-diversified portfolio should also include an appropriate mix of fixed income and money market instruments, which will depend on an investor's risk tolerance and individual circumstances. All of these products are available through Odlum Brown Limited.

• Different Makes a Difference – The Odlum Brown Research Blog
• The Odlum Brown Report  – A monthly newsletter with market commentary, Model Portfolio updates, financial planning topics and special events information.