D³’s method of finding and evaluating investments is distinctive in two respects.  First, instead of screening thousands of companies in a statistical database, D³ generally targets industries which are deeply out of favor or individual growth companies whose valuations have imploded.  Then we sift through the rubble from the bottom up to identify those companies with the best balance sheets and cash flows, the strongest management and boards, the best five year earnings growth prospects, the most durable competitive advantages, and hidden or overlooked assets which might be monetized.  This approach focuses us on companies with the largest differences between market and “intrinsic” value.  Such differences provide downside protection, cushioning us from error or adversity with a “margin of safety.” 

Our approach entails looking at many stock market “dogs.”  Hence the D³ name, which stands for “David’s dirty dogs.”   The second distinctive aspect of our approach is that we look five years out, instead of only one quarter out as most other investors do.  Our long term approach insulates us from short term “noise” so that we can focus on fundamental company, market, and competitive trends.