DWCM Watchlist and Investment Process Overview

Since I started investing I have always maintained some type of watchlist.  Below is an outline to my investment process.  I hope that you find this information useful as well as providing additional detail into our investment process here at DWCM.

The purpose of a watchlist

1. Track companies that I have an interest in owning
2. Track companies that I have an interesting in shorting (companies that I see as overvalued and expect their stock price to decline)
3. Track companies that I just find interesting but may never own a position in
4. Organization, keeping various notes in one location helps keep my thought process straight 

How do I develop a watchlist

1. I read allot.  To me education is a lifelong process so I am always trying to better educate myself not only in regards to specific companies but various economic data and investment analysis tools and techniques.  Sources of information include the following (see a complete list on the DWCM website  here)
• Major newspapers such as the WSJ, NYT, Bloomberg, etc. 
• Other investment blog sites such as The Big Picture, James Altucher, etc.
• Specific finance related sites such as Morningstar, StockCharts, etc. 
2. Develop company screens which focus on specific company qualities which can be both fundamental and technical in nature
3. Discussion with other investment professionals.  Notice how I did not say investing tips.  Tips are for waiters.  I view tips from people from a skeptical nature.

Investment analysis process

When I find a stock that I begin to track I put it through our investment analysis model that we have created here at DWCM.  The model is based on fundamental factors such as economic margin, debt levels, revenue growth, etc. The outcome of the model is a ranking of how strong the company appears to be the higher the rank the better on a scale from 1 to 5.  From there we look at technical analysis points such as support and resistance level, volume, and moving averages to determine where a possible long or short position could exist.

I typically keep a stock on the watchlist no matter what the final scoring is.  I do this for a few reasons

1. It gives me a good history to determine if I made the correct investment decision and how my overall investment process is performing.  Did I make a good call on a certain sector or did I miss a buying opportunity, and even better yet did I avoid a huge market meltdown thus preserving client's capital.  
2. Leaving the data also lets me easily update with new data to determine if our modeling will change and thus create new opportunities either long or short.

Even though a company may be left on the watchlist I may not follow or track it as closely as I do other companies. But again for historical purposes and having data at my finger tips I generally leave it on the watchlist.  At times I may remove names from the watchlist that I just don't see a future with but I always maintain our database.

Here a link to our current DWCM Watchlist on our website.  I've also enclosed a PDF version below.

If you have any questions regarding our investment process or analysis I invite you to reach out to us at any time via our website or email at pfenner@dwcmllc.com