Howard B. Aschwald, CFA
Quantum Capital Management – Assets Under Management – $680 Million
AFG Client Since 2000
1. Can you tell us a little about Quantum Capital (Who you serve, philosophy)?
a) Quantum Capital is an independent RIA that manages assets for high net worth clients and institutional investors. We are a growth at a reasonable price investor that combines quantitative and fundamental research into high conviction, risk controlled multi market-cap equity strategies.
2. You have been a client of The Applied Finance Group (AFG) for over 15 years, what sets AFG apart from other equity research providers?
a) We were looking for a differentiator in the various investment metrics available in the equity research process. Too many standard metrics did not add stock selection value and offered little in the way of evidence to support their utilization. We initially pursued EVA (Economic Value Added) and moved quickly to adopt Economic Margin and the Applied Finance Group’s analysis framework. The AFG database and many of their unique metrics allow us to calculate a weekly scoring and ranking system which then allows our fundamental analysts to add human capital to select stocks and construct portfolios.
3. Has AFG helped you reach better investment decisions?
a) Yes – We periodically test our AFG based scoring system for efficacy and consistency. Not only do we uncover interesting ideas, but the AFG Value Expectations modeling component allows our analysts to input human judgement on key drivers to insure that we adhere to our disciplined investment process.
4. How does AFG’s research process and applications help the investment team save time?
a) Without the AFG database and time-saving modeling software, it would be extremely time consuming and much more error-prone to manually score the universe of stocks that comprise the equity strategies that we manage for our clients.
5. Any additional comments about AFG?
a) We routinely send our analysts to AFG conferences and workshops, not only as a refresher, but to make sure that analysts are on the “same page” in the language we use to communicate our investment ideas. We combine AFG metrics and language and our own proprietary methodology to create a unique research process. Over the years, we have found AFG personnel to be very engaging and helpful to all of our staff.
6. Quantum Capital has grown tremendously over the past five years, any advice you would like to share with growing firms?
a) We have discovered that institutional investors want a consistent and disciplined research process that clearly differentiates why the process has worked in the past and will continue to work in the future. With passive and multifactor investing gaining increasing AUM market share in investor portfolios, active managers must demonstrate why their investment process cannot be replicated more cheaply by software. Using AFG tools with human judgement will allow active firms to stay ahead of the growing investment automation future.
7. We are in an election year, does the outcome play a role in your investment decision process? If so, can you please elaborate?
a) This year’s politics creates much more uncertainty and the increased potential for the temporary manifestation of negative market outliers. Portfolios will do best when solid valuation is the basis for stock selection.